Overview:
Local Excise Duty (LED) collections experienced a 12% increase before the implementation of DTS, followed by a 7% average decline, and then a 13% average increase, representing an overall LED revenue growth rate of 9% between July 2016 and June 2023.
The Uganda Revenue Authority (URA) has committed to reviewing the costs associated with the Digital Tax Stamps (DTS) system, following concerns raised by manufacturers. The pledge was made by URA Commissioner General John Musinguzi Rujooki during the launch of a report on the Impact of Digital Tax Stamps, organized by Private Sector Foundation Uganda and PricewaterhouseCoopers (PwC).
Rujooki acknowledged the concerns of manufacturers, stating, “We understand the concerns of our stakeholders and we are committed to working together to find solutions.” He emphasized that the DTS system has helped to clean up the market and ensure a fair playing field for compliant manufacturers.
However, Rujooki also highlighted the need for manufacturers to comply with the DTS system, citing the example of Kombucha manufacturers who were previously not paying taxes but are now compliant. He emphasized that the DTS system has helped to increase revenue collections and reduce illicit trade.
Commissioner for Internal Trade, Zackey Kalega, representing the Minister of State for Trade, emphasized the importance of addressing illicit trade, which is a significant challenge for micro-small and medium enterprises. He revealed that the Ministry is working on a paper to address illicit trade and ensure fair competition.
Legal Director and Company Secretary, Agnes Ssali, agreed that illicit trade is a major issue in Uganda’s manufacturing sector, particularly in the alcohol sector, where DTS misuse and under-declaration are prevalent. She emphasized the need for digitization to address these challenges.
Despite challenges, Domestic Revenue collections have continued to grow significantly since the introduction of DTS in 2019. Local Excise Duty (LED) collections experienced a 12% increase before the implementation of DTS, followed by a 7% average decline, and then a 13% average increase, representing an overall LED revenue growth rate of 9% between July 2016 and June 2023.
URA has conducted numerous workshops and training sessions to help businesses understand the importance of DTS and integrate it effectively into their operations. However, non-compliance remains a significant hurdle, and the report suggests that digitization is the solution to addressing illicit trade and ensuring fair competition and consumer protection.