A beer production line. The reduction only applies to any alcoholic beverage other than spirits (made from Ethanol), beer or wines.
By Annet Nantongo
Uganda Revenue Authority has revised the price of a digital tax stamp for any other alcoholic beverages to facilitate business continuity for this category of taxpayers.
This change comes after the manufacturers and importers of the said drinks met contractual conditions that permit revision of the price of a tax stamp. One of the conditions pointed out was high costs of production.
On August 21st 2023, URA issued a public notice that indicated a reduction in the price of a tax stamp for other alcoholic beverages from UGX 35 to UGX 17 (VAT exclusive) per stamp to enable taxpayers to meet their tax obligations. As per Regulation 9 (1) of the Tax Procedures Code (Tax Stamps) Regulations 2018, a manufacturer or importer shall purchase tax stamps from the Commissioner at a fee specified by notice in the Gazette and in a newspaper of wide circulation.
This reduction only applies to any alcoholic beverage other than spirits (made from Ethanol), beer or wines.
Whereas alcoholic drinks such as beer pay UGX 36, and spirits and wines pay UGX 110, per tax stamp, they were also granted a reduction in tax stamp prices. In 2019 there was a reduction of the spirits, wines and tobacco products, a further reduction of the spirits and wines stamp fee in 2021, and another reduction of beer, soda, Water and tobacco products in 2022. All reductions were also mainly attributed to high costs of production.
In addition to aiding business continuity, the decrease in tax stamp prices will improve compliance by the sector through increased stamping and activation, reduced seizures/penalties for non-compliance, and growth in the DTS & Local Excise Duty (LED) register.
In the financial year 2022/2023, URA collected UGX 1,920.6 Billion from local excise alone, posting a 90.83% performance against a target of UGX 2,114.63 billion. This revenue is collected from 25 products and services of which 13 are the gazette products for DTS application. The DTS register in the same period stood at 1,088 taxpayers of which manufacturers are 824 and importers are 264.
Furthermore, the stamp price changes are geared towards increasing filing and paying of Excise Duty. In the same financial year, URA received 8,627 LED tax returns against a target of 10,966 returns, posting a 73.41% performance in filing. Business facilitation moves such as reduction in tax stamps are meant to bring in the 26.59% who are not filing their LED returns as URA seeks to increase domestic revenue collection for the collective development of Uganda.
The digital tax stamp is a mark affixed on gazetted products to uniquely track and trace them on the market. The stamps come in different formats such as; the direct ink print mainly on bottled water, soda and beer; the paper stamp on cigarettes, some bottled water, soda beer brands and on wine/spirit bottles.
Section 19A of the Tax Procedures Code Act, 2014 states that a person dealing in goods, whether locally manufactured or imported shall affix a tax stamp on any of those goods as prescribed by the minister using different statutory instruments that define where and how the stamps shall be affixed. Currently, the stamps are affixed onto the products upon packaging.
However, overall this change also implies that URA shall have increased compliance action through enforcement to deter any contradiction of the DTS laws and regulations. URA implores all local manufacturers and importers of gazette products to stamp and activate the stamps on their products immediately after packaging.
