The Government of Uganda has proposed to slap a Shs30m fine or a three-year prison term on manufacturers and traders who tamper with a digital tax stamps machine.
This is contained in the Tax Procedure Code (Amendment) Bill, 2023, which is currently being scrutinized by Parliament.
“A person who makes an unauthorised interference to, or tampers with, a digital tax stamps machine commits an offence and is liable, on conviction, to a fine not exceeding one thousand five hundred currency [1,500] points or imprisonment not exceeding ten [10] years,” the proposed amendments read in part.
According to the Bill, anyone found to have fixed and activated digital tax stamps on wrong goods, brands or volume other than those gazetted for the purpose will be fined Shs10m or three years in imprison, on conviction.
Uganda Revenue Authority (URA) in 2019 started the implementation of the Digital Tax Stamps system to ensure compliance.
Digital tax stamps are physical paper stamps applied to goods or their packaging containing among other things, security features to prevent counterfeiting, tracking capabilities that aid URA’s monitoring of compliance of the product in order to curb tax evasion and increase revenue collection.
Once stamped, a product can be verified by URA agents for authenticity using specialised digital equipment.
Digital stamps, according to URA, addresses challenges of illicit trade, counterfeit products and unfair competition.
However, manufacturers opposed the development, arguing that it increases cost of production to a staggering figure of about Shs100bn per annum.
Onapito Ekomoloit, the Legal and Corporate Affairs Director at Nile Breweries Limited, said introduction of the Digital Stamps means that the beer maker parts with Shs30bn in installation of equipment to put the stickers on each beer bottle produced.