A total of 317 manufacturers of the gazetted products are currently registered on the Digital Tracking Solution (DTS), Uganda Revenue Authority (URA) has revealed.
URA had targeted to register 107 manufacturers, the additional 210 indicates a 262% performance.
A DTS is a mark or label applied to goods and their packaging and contains security features and codes to prevent counterfeiting of goods through its trace and track capabilities.
They come in different formats like; a direct ink print mainly on bottled water, soda and beer, the short rectangular paper stamp on cigarettes, the round paper stamp on some bottled water, soda and beer brands, and the long rectangular paper stamp which goes over the top of wine/spirit bottles.
It is currently implemented in different products like; beer, soda, water, wines, spirits, cigarettes, sugar and cement.
The system provides for application of Digital Tax Stamps by producers and importers, using both automated and manual processes of production.
Ian Rumanyika, the Commissioner of Public Corporate Affairs told ChimpReports that the solution was designed to deter existing deficiencies in tracking and tracing of locally manufactured and imported products, which had contributed to less than adequate tax receipts from the manufacturing sector as well as importation of excisable products.
“DTS was sought to aid tax administration to mitigate revenue losses. The DTS implementation status stands at 257% in terms of on boarding taxpayers that were originally scoped to use the DTS at inception of the project; 406 sites have been registered out of the target of One hundred forty 140 sites,” he said.
89 importers of the gazetted products, he said, have been registered against the targeted 33, indicating a 249% performance.
“The DTS implementation for Cement and Sugar which started on 1st April 2021, stands at 55.5% in terms of on boarding local producers scoped to use DTS; 10 sites have been registered out of the target of 18. Importers on the other hand are at one percent with one importer registered out of sixty-nine (69) sites scoped,” he said.
Rumanyika further noted that the number of taxpayers using DTS and contributing to Local Excise Duty (LED) collections has increased significantly with 109 taxpayers on DTS paying LED in April 2021 compared to 43 taxpayers in April 2020, showing a growth rate of 153%.
DTS Revenue Performance
Rumanyika said that DTS has registered an 11.6% year on year growth in LED collections from 211 manufacturers using DTS, in the current FY 2020/21.
He said that the number of taxpayers contributing to LED through DTS has increased from 43 in April 2020 to 109 in April 2021.
Challenges in implementation of DTS
Rumanyika told ChimpReports that the alcohol products prescribed for DTS as well as those listed in the second schedule of the Excise Duty Act do not fully exhaust all alcoholic beverages in the market like “Kombucha” products.
“This has led some local producers to hide behind this product and compete unfavourably with a cost advantage due to non-payment of Excise duty or Tax Stamp fees. The new policy changes will address this challenge,” he said.
Stamp forgeries, he said has been mostly manifested in the spirit stamps and this has led to a lot of fake products being found in the market which is a major revenue leakage.
URA, he said, has increased its surveillance and a number of non-compliant entities have been apprehended and fined.
URA recently confiscated over 2000 unstamped products from Bee De Eff (BDF) Spirits Limited, which makes gins and Waragis. The products confiscated include Sports gin, Spark Waragi, and Captain Cherry which were being distributed in the night.
Transition period for cement and Sugar
This, according to Rumanyika, is another huge challenge. He said that they (URA) are currently at 55% implementation for both manufacturers and importers of cement and sugar.
“A three-month transition period was granted to the manufacturers and importers of the prescribed products to register and acquire the digital tax stamps while exhausting any un-stamped products. Thus, enforcement on DTS usage will take effect 1st July 2021 whereby those that have not yet come on board will be asked to account for any un-stamped products we find in the market,” he said.