Private sector threatens industrial action over Digital Tax Stamps

Production: Tiles in a production line. Manufacturers are threatening industrial action because of the way the implementation is being done. FILE PHOTO  

In Summary

• Court directive. Meanwhile, Court yesterday directed the parties in this case to sit, discuss and clarify the notice issued by the Respondent (URA) in newspapers in respect of the meaning of words ‘any person’ in relation to relation to any gazette products not bearing the Digital Tax Stamp to be liable to pay Penal Tax equivalent to the double tax due on goods or Shs50,000,000 whichever is higher.
• The parties were requested to report back on the outcome of the discussion clarifying from the Respondent on February 10th.

By Dorothy Nakaweesi

Members of the Private sector have raised serious concerns contesting the process in which the Digital tax Stamp (DTS) is being implemented. If this is not resolved, they are threatening an industrial action.

Private Sector Foundation Uganda (PSFU)’s executive director, Mr Gideon Badagawa said: “As key stakeholders, manufacturers are threatening industrial action because of the way the implementation is being done.”

This reaction follows a court order that dismissed the February 1 deadline which Uganda Revenue Authority (URA) had instituted on non-complaint manufacturers.

This essentially means that URA can now continue the gradual implementation devoid of a deadline.

Private sector demands
Mr Badagawa said that DTS implementation is central to the viability of the growing industrial and trade sector in Uganda but they want the process to be better managed.

“Secondly, the private sector feels that all the money spent on a Swiss company (SICPA) should have remained in the country because what they are doing is not a very sophisticated assignment and can be done by the local firms,” Badagawa said.

Furthermore, the private sector also expressed concern on who is going to take up the cost of the DTS service implementation.

“The manufacturers and consumers are not ready to pay for this service because it is going to cause an increase in the final prices,” Mr Badagawa added.

Private sector, therefore recommended that the cost for this service should be embedded within the administrative cost of URA just like government agreed to clear the dues for the first one year of DTS implementation.

Another pertinent concern the private sector raises, is the company hired to implement DTS has distorted the operation of the manufacturers and this will impact their insurance premiums.
“When you get the DTS installation machines into the factories of our members, they distort the manner in which these factories are working with their insurers,” Badagawa said.

DTS
Digital stamps are physical paper stamps with security features and codes applied to goods or their packaging to enable manufacturers and traders to track a product’s movement.

The goods to be subjected to DTS comprised in water, soda, wine, beer, spirits and tobacco should bear the Digital Tax stamps under the Digital Trucking System which is being implemented by the respondent (URA).

The system, according to government, will also be a key feature in eliminating counterfeits and fake products on the market.

The stamps are part of URA’s scheme to combat illicit trade, close revenue leakages while managing compliance of some multinational companies that exploit gaps and in the tax collection architecture.

Compliance
Mr Ian Rumanyika, URA’s manager corporate affairs, said: “The response of companies complying has been very impressive. As of January 15th this year, a total of 27 manufacturers and importers had completed their registration for DTS.”