UGANDA– Uganda manufacturers association has asked the government to suspend the enforcement of Digital Tax Stamps in a bid to reduce cost of doing business, reports the Monitor.
According to the manufacturers, the current business environment is challenging with high cost of credits, power and inadequate infrastructure and therefore the digital tax stamps will further increase the costs.
“We are very disturbed about the DTS, in a way, it is negative and it going to add to the cost of doing business.
It is going to make it hard for consumers to afford our products and that will affect revenue that the government will collect,” said UMA board chairperson, Ms Barbara Mulwana.
However, Uganda Revenue Authority’s (URA) argues that the new stamps are part of a scheme to curb illegal trade, revenue leakages, increase tax collection an deficiency in managing taxpayer compliance.
URA reports that if properly implemented, manufacturers, distributors, retailers and consumers will be able to verify and trace specified goods along the distribution chain.
According to Ms Mulwana, the implementation of the DTS which is expected to start in March 2019 is not feasible even over the next six months period as it would have adverse implication.
She therefore recommended the suspension of DTS until all stakeholders come in to a conclusive deliberation on its impact on the manufacturing sector.
According to projections by Mr Onapito Ekomoloit of Nile Breweries Limited, the implementation of the DTS technology could cause the brewery to lose not less than US$8 million in installation of DTS technology in just one single production.
Mr Simon Kaheru, public affairs and communications director at Coca Cola Beverages, said the company will be forced to reinvest US$6 million more to comply with URA requirement.
Mr Simon said that this does not make business sense to the company shareholders, considering that such funds can attract handsome returns elsewhere.
Digital tax stamps are physical paper stamps applied on the packaging of goods.
URA requires that the DTS to include security features and codes to prevent counterfeiting, tamper proof features, track and trace capabilities
This will enable consumers validate the stamp, traders and manufacturers track the product movement and government to monitor compliance of the product and stamp.
The stamp also features 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.