URA intercepted six trucks with 1,900 bags of 50kgs each of smuggled Simba cement over the last couple of weeks in the areas of Lwakhakha and Suam rivers. Of the loot recovered, 1,500 bags did not possess any digital tax stamps and had not met any customs obligations required of cement importers, which makes them smuggled goods. The remaining 400 bags of cement had digital tax stamps but were smuggled through porous border points.
The trucks UBK148Z, UBK239P, UBB717U, UBN469B, UBN430K, UBH412T, moving from the Kenyan side between, were each smuggling 250 bags of unstamped cement. The two trucks of UBN308N and UBH736B were smuggling 250 bags and 150 bags respectively of stamp cement.
“The bags of cement with stamps had no customs import documentation to indicate payment of taxes dues. It was also found out that these trucks get one import document for one truck of cement and they use it to smuggle in like 3 or more trucks without meeting their customs tax obligations,” noted Ibrahim Bbossa, the URA Spokesperson.
A taxpayer who fails to affix or activate a tax stamp is liable to a penal tax equivalent to double the tax due on the goods or UGX.50 million whichever is higher as stipulated under Section 19B (1) of the TPCA 2014, 2. Other enforcement measures including seizure of goods, closure of business premises, distress proceedings or prosecution.
Cement manufactured within the East African region and imported into Uganda attracts 0% import levy. However, they must declare the goods and pay VAT of 18%, Withholding tax of 6% and infrastructure levy of 1.5%. all the cement confiscated over the weekend had none of the above.
Cement is one of the 26 products and services required to pay excise duty. Excise duty is a tax on consumption of specified goods and services. It is collected to generate revenue as well as regulate consumption of certain goods and services by making them slightly expensive. It is also collected on imported items some of which can be manufactured in Uganda.
Cement pays excise duty of Shs500 per 50kgs by applying digital tax stamps. The application of the digital tax stamps, which rolled out in 2019, eases declaration and payment of excise duty to URA by the importers and manufacturers of the 13-item gazette to apply tax stamps.
The other 12 products gazette to affix digital tax stamps include Beer, Soda, bottled water, wines, spirits, tobacco products, sugar, cooking oil, fruit and vegetable juices, non-alcoholic beverages (kombuchas, teas and health drinks, bushera), alcoholic beverages and fermented beverages (cider, mead, perry or other forms of beers).
Digital tax stamps level the market field by fighting illicit traders such as smugglers who want to sell the same product without meeting required tax obligations. The stamps also provide a track and trace capability of goods along the value chain, to ensure the standards are not violated, for the good health of the consumers.