Uganda Revenue Authority (URA) recently communicated to the manufacturers about the change in the go live-dates of the much anticipated Digital Tax Stamp Solution (DTSS) to allow for the completion of installation of machinery at the factories but also make sure the due process of gazetting the solution is complete.
As URA is set to roll out this electronic tax system, we need to look at how it has worked in the two neighboring economic giants of Kenya and Tanzania.
This will help understand and evaluate the benefits Uganda is likely to enjoy from the implementation of this digital stamp solution.
Uganda is the third country in the East African region to implement the digital stamp solution after the two economic giants that man large cargo at their ports.
Tanzanian governmenthas watched over as the number of counterfeits in the market is increasingly falling,having launched the first phase of the system on January 15, this year (2019) through a Swiss firm, SocieteIndustrielle et Commerciale de ProduitsAlimentaires (SICPA) during which period, electronic stamps were installed in 19 companies that produce beer, soda, cigarettes, wines and spirits across the country.
Soon after the system is implemented, Ugandan traders, manufacturers, importers,distributors and retailers will be able to monitor the movement of their manufactured /imported goods through an App installed on their phone or Laptop.
They can also request a report of their transactionswhich will improve record keeping of the traders.
The stamps will also facilitate easy processing of VAT and quicken return filing.
The Digital Stamp solution management system automatically stamps the products at the end of the production line and will be able to submit the count in real time through a system to URA.
For the importers, the system will quicken customs clearing as the information would have been captured beforehand.
Kenya reduced drastically the number of days for clearing customs after the implementation of the system.
Currently, Uganda takes close to 7 working days to clear goods.
URA intends to have their roll out plan soon and will have its first phase implemented throughout the 2019/2020 financial year and will start with water,beer, soda, cigarettes, wines and spirits.
This was recently revealed by Mr Cyprian Chillanyang, the business policy assistant commissioner while at the launch of the Taxpayers’ Appreciation Month for Northern Uganda in Gulu
Chillanyang said that with digital stamp system, consumers are able to verify the genuineness of the product and stamp, by looking out for the physical security features on the stamp and/ or sendingan SMS of the reference Number on the stamp to URA and feedback shall be given with key details about the manufacturer of the product.
This will help government raise revenue and protect Ugandans against harmful products and counterfeits from accessing the local market.
Early thismonth, Tanzanian local newspaper, The Citizen (Online) quoted Tanzania’s deputy minister for Industry and trade Ms Stella Manyanya saying that Electronic Tax System has enabled their government to use modern technology to obtain production data timely from manufacturers .
She said the new technology has helped the government to curb revenue leakages and also helps it to determine in advance the amount of taxes to be paid as excise duty,Value Added Tax (VAT) and Income taxes.
Phase 2 of the project, which saw electronic stamps being installed on products such as sweetened or flavored waters and other nonalcoholic beverages began on August 1 and according to Manyanya, the outcomes so far have been encouraging.
“During the Period, we have seen the challenge of counterfeits in the market going down. We must win this fight and the ETS offers us an opportunity to achieve the goal,” she said, calling for concerted efforts among stake holders to defeat the vice.
Manyanya said Tanzania, like other countries across the world,has its means of protecting its quality and domestically manufactured products against unfair competition.
With an increasing number of fake products on Ugandan market, the Digital Tax Solution is meant to replace the hitherto paper-based tax stamps initially attached to cigarettes, wines and spirits.
The current system is prone to cheating of taxes through under declaration among other malpractices.
By Amon Baita
