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Gov’t pushes for digital stamps despite opposition from manufacturers

FILE PHOTO: Digital tax stamps to be issued on cigarettes.

Kampala, Uganda | THE INDEPENDENT | The implementation of the digital stamps as a revenue administration measure will go ahead in the next financial year despite rejection from manufacturers.

The Finance Minister Matia Kasaija said on Thursday while reading the 2019/20 financial year budget that “The Excise Duty Act was amended to provide for the registration of manufacturers, importers and providers of excisable goods and services. This will also reinforce other tax reforms like digital tax stamps.”

The rollout of digital stamps was expected to start in April 2019 with high-risk products like cigarettes, wines, and spirits but was stopped by a court injunction.

Another attempt to get 103 billion shillings passed by MPs fell flat last month after it was rejected .

It was intended to help in the operationalization of the initiative. There is a likelihood that the government will push through a supplementary budget for the initiative.

Kasaija mentioned digital stamps among the interventions in tax administration to be implemented starting July 1, 2019.

He mentioned three initiatives: use of Electronic Fiscal Devices (EFDs) to improve compliance in VAT; use of a digital tax stamps solution to avert under-declaration of excise and customs duties; and enhance rental income tax collection.

Other products that must have digital stamps include sodas and mineral water.

The stamps are expected to have the track and trace capabilities to enable consumers to validate them, traders and manufacturers track the product movement and government to monitor compliance of the product and stamp.

A quick response code (QR code) that will allow distributors, retailers, and consumers to use an app on their smartphones to verify the authenticity of the products will be used.

URA is arguing the digital stamps are meant to help traders suffering from an unfair competition that comes with contraband goods.

URA has a target of Shillings 20.8trillion for the 2019/2020 financial year up from Shillings 16 trillion it is expected to collect this year. URA says the initiative would generate Shillings 48bn in the coming financial year.

After the budget reading, Doris Akol, the URA commissioner general, said: “The digital stamps will be rolled out. What government is trying to do is to make it easier for the manufacturer by meeting them halfway on the cost but Parliament did not support that. Now it means that unless something is done, the manufacturers will have to meet the cost of implementing the [digital stamps.

The manufacturers biggest issue has been on the cost – they argue that while the initiative will help the government generate more taxes, it increases their production costs.

Gideon Badagawa, the executive director of Private Sector Foundation of Uganda (PSFU), told URN last week that his group was still engaging the ministry of finance to ensure that government meets the cost of digital stamps.



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