The implementation of Digital Tax Stamps Solution by government through Uganda Revenue Authority (URA) stands in jeopardy after the tax boday was accsued of fraduently awarding the contract
Manufacturers and consumers of beverages have since petitioned Parliament calling for halting of the implementation of digital tax stamps rolled out on 1st November 2019.
Digital Tax Stamps are physical paper stamps that are applied to goods or their packaging but in this case contains security features and codes to prevent counterfeiting. They are sought to enable manufacturers, distributors, retailers and consumers to conveniently verify and trade all specified goods throughout the distribution chain while ensuring that they meet their tax obligations.
Gideon Onyango, the Samia Bugwe North MP, who presented the petition to Parliament onbehalf of manufactuerers called for an investigation into how URA settled for a Swiss based company SICPA- SA as selected contractor to implement digital tax stamps, saying the selection flouted
“Ugandans were locked out of the whole process that denied the country revenue and (encouraged) capital flight. These are the same machines owned by UPPCC (Uganda Printing & Publishing Corporation) and Uganda Security Printing Company Limited and that they have local capacity to implement the Digital tax system,” Onyango said.
The group also questioned the decision by URA on the issuance of Digital Tax Stamps at varying costs like Shs15 for a bottle of water, Shs20 for a bottle of Soda, Shs55 for a bottle of beer, Shs80 for a packet of Tobacco and Shs185 for a bottle of Spirit and wines, describing this as discriminatory and yet the Digital Tax Stamp is the same and its purpose is only to track and trace the product.
The Petitioners also warned that giving green light to URA to implement the Digital Tax Stamps will increase cost of production and will put legitimate manufacturers out of business yet little has been done to bring the informal sector into the formal sector.
“This presents a further risk of ordinary Ugandan resorting to illegal drinks that are less expensive and that are a health risk,” said Onyango.
The petitioners made a number of pleas among which include, calls to have Parliament to place a halt on the Digital Tax Stamps until committee investigates the procurement procedures and all matter put in the prepetition herein.
The beverage manufacturers also want Parliament to investigate the cost of the stamps, selective method of implementation and mechanisms to bring the informal sector to taxable capacity prior to implementation of the tax measures.
Speaker Rebecca Kadaga directed the Parliamentary Finance Committee to examine the petition.
Uganda has officially joined regional neighbours including Kenya, Rwanda and Tanzania on 1st November 2019 to implement digital tax stamps.
According to the joint statement issued by URA and Ministry of Finance early this month, the main focus of the implementation of DTS is to enhance government’s revenues through combating counterfeit products on the market and protect consumers’ health and manufacturers’ earnings as well as enforce compliance through real time and accurate declarations by manufacturers.
We’ll keep you posted on this story