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Digital tax stamps

URA announces deadline for manufacturers, importers to acquire digital stamps

"... effective 1st October 2020, every local manufacturer or importer of beer, soda, spirits, wine, mineral water or tobacco products including cigarettes, shall be required to have each unit of the stocked, retailed or stored products affixed with a digital tax stamp," the Uganda Revenue Authority (URA) said in a statement.
posted onSeptember 17, 2020
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Ugandan manufacturers and importers have been given up to October 1 to acquire digital stamps for all the goods in their stock.

"... effective 1st October 2020, every local manufacturer or importer of beer, soda, spirits, wine, mineral water or tobacco products including cigarettes, shall be required to have each unit of the stocked, retailed or stored products affixed with a digital tax stamp," the Uganda Revenue Authority (URA) said in a statement.

"All such goods manufactured or imported on or after the above date shall bear a digital stamp before supplying or distributing them to the market."
 
According to the statement, all manufacturers and importers of products gazetted for DTS (Digital Tax Stamp) with stock manufactured or imported before the roll-out date of November 1, 2019, must recall the stock from the market for stamping.

Secondly, all distributors, retailers, and consumers shall not stock, store, or sell products gazetted for DTS without a digital mark.
 
"Every manufacturer, importer, distributor, agent and or trader of the gazetted goods, shall be required to clear their stores of any unstamped goods, otherwise such goods found in their possession shall be subject to compliance actions in line with the provisions of the law," URA said.

Pursuant to Section 19A and 19B of The Tax Procedures Code Act 2014 as amended and Regulation 3, 5 and 14 of the Tax Procedures Code (Tax Stamps) Regulations 2018, URA implemented the use of a DTS to enable manufacturers, importers, distributors, consumers and government agencies to uniquely identify products as well as track and trace their origin from production or import up to the consumer market. 

A Digital Tax Stamp is a visible stamp, label or mark placed on a gazetted product to show that the applicable excise duty has been paid.

The tax is charged in form of Excise Duty, which is imposed on specific goods or services produced, imported or provided within a country.

The duty is computed as a percentage or specific rate on the sale, import or provision of goods or services.  

“It is charged when the goods exit the factory or when they are imported into the country,” URA says on its website.

According to URA, they are trying to move from the traditional approach of attaching staff to each factory to physically monitor the volume of production.

The first tax stamps were rolled out in 2002 but because of their manual nature, they were not effective because the target revenue collections were not met.

“… these tax stamps were manual in nature and applicable to cigarettes only,” says URA.

“Despite the said measures, performance of excise duty has persistently remained below expectations due to inefficiency in monitoring of the products. This has resulted in loss of government revenue, increase in illicit trade and unfair competition to legitimate investors, manufacturers or importers.”

The Authority hopes these inefficiencies can be eliminated using DTS since there’ll be digital trace-ability solutions that guarantee security and authentication of the tax stamp.

The affected goods are Beer, Spirits, Wine, Soda, Mineral water, and Tobacco products, both locally manufactured and imported.

How stamps are affixed

According to URA, “for locally manufactured goods, affixation shall be done in the production facility immediately after packaging of the product”.

And for imported goods, it is done in a “place registered by the Commissioner General within seven days upon clearance from Customs or at the production facility within the exporting country, subject to such conditions as the Commissioner General may specify.”

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