- DTS was rolled out in the Financial Year 2019/20
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High cost of digital tax stamps keeps the cost of doing business high
Image: CORPRATE IMAGE
Players in the manufacturing sector have asked Gov’t to reduce the cost of Digital Tax Stamps(DTS) in a bid to drive usage, by all the targeted users.
The Uganda Breweries Managing Director Andrew Kilonzo during the media day engagement with business reporters and editors said that the earlier promise was that once all manufacturers embrace digital tax stamps, the cost of the stamps would reduce but that has not been achieved.
“The promise of the system was that all manufacturers would get into the system and ensure a levelled playing ground. However, in the outlets, you will see our products such as Uganda Waragi bearing tax stamps, being sold next to items that do not have,” he said.
In Uganda, the use of DTS was rolled out in the Financial Year 2019/20 following the launch of the Domestic Revenue Mobilization Strategy by the Finance Ministry. DTS was also aimed at addressing revenue leakages.
In Kenya, DTS were rolled out in 2013 while Tanzania and Rwanda both launched DTS in 2019.While the intention behind these measures is commendable, the varying costs of digital tax stamps across the region have created a complex business environment. For each country,the cost of the stamp for each category of goods has been set out in the respective regulations governing the operation of DTS.
The solution providers of DTS are the same across the region, but the cost of stamps differssignificantly. The stamp fee is additional to the excise duty tax payable under the country’srespective Excise Act.
In Uganda, DTS costs are at UGX 110 (wines and spirits) and UGX 36 for beer; in KenyaDTS charges are UGX 134.88 for wines and spirits and UGX 80.93 for beers. Tanzania’scharges for DTS are UGX 51.75 for wines/spirits, UGX 23.02 (for locally produced beers)and UGX 27.58 (for imported beers) while for Rwanda, DTS charges are UGX 761.13 and UGX 152.23 for spirits and wines respectively.
According to Kilonzo, the high cost of digital tax stamps keeps the cost of doing business high, hence some manufacturers find a value in avoiding the stamps. “Maybe we need a different approach, if you bring down the cost of digital tax stamps, it stops being a barrier and you get more players embracing it hence driving volumes up.”