More than 1,680 manufacturers and importers are now registered under the Digital Tax Stamps (DTS) system as the Uganda Revenue Authority (URA) expands its use of technology to track excisable goods and curb tax evasion.
The system, URA says, has helped to bring previously informal or non-compliant producers into the tax system while improving its ability to track production volumes and determine excise duty liabilities.
Speaking during an engagement with manufacturers in Kampala last Thursday, URA commissioner for corporate services Richard Kariisa said improving compliance would be critical as the tax authority seeks to meet a revenue target of Shs46.6 trillion.
Kariisa, who represented Commissioner General John Musinguzi Rujoki, said URA would continue relying on systems such as DTS and the Electronic Fiscal Receipting and Invoicing System (EFRIS) to strengthen tax administration.
The DTS system requires manufacturers and importers of selected excisable products to affix digital stamps that allow URA to trace goods from production or importation through the distribution chain.
The meeting also raised concerns about the cost manufacturers incur in purchasing digital tax stamps.
Kariisa said expenditure on the stamps is deductible for income tax purposes, provided manufacturers maintain adequate records.
Felix Niwagaba, who is in charge of Digital Tax Stamps at URA, said manufacturers receive EFRIS invoices when purchasing stamps, which can be used to support deductions when filing income tax returns.
A digital stamp currently costs Shs30 for beer, Shs60 for spirits and wine, Shs13 for mineral water, Shs17 for soda, Shs135 for cement and Shs75 for tobacco products.
The cost is borne by manufacturers and importers as part of their compliance obligations.
Digital tax stamps currently apply to a range of excisable products, including beer, spirits, wine and other alcoholic beverages, soft drinks, fruit and vegetable juices, bottled water, fermented beverages, tobacco products, cement, sugar and cooking oil.
URA introduced the system principally to address weaknesses in excise duty collection, including under-declaration of production volumes and the movement of untaxed goods onto the market.
Niwagaba said the system also gives manufacturers information that can help them track products and stocks through the supply chain.
However, enforcement remains a challenge, particularly because URA has to monitor manufacturers, distributors and retailers across the country.
Niwagaba said some taxpayers continue to find ways of circumventing the system, requiring URA to extend enforcement beyond factories to products already in the distribution chain.
URA has also tightened penalties for breaches of DTS requirements as it seeks to reduce the competitive advantage enjoyed by businesses that avoid excise duty.
The DTS system is implemented by SICPA Uganda and forms part of government’s broader efforts to increase domestic revenue collection.
URA says DTS, alongside EFRIS and other tax administration measures, has helped strengthen compliance and close gaps such as under-declaration of production.