From illicit to legit: DTS drive for fairer market

Uganda Breweries Managing Director Andrew Kilonzo has urged government to drive usage of the Digital Tax Stamps(DTS) by all targeted users.

Speaking at a media engagement, Mr Kilonzo said manufacturers still expect all players to comply to the DTS system and ensure a levelled playing ground, adding that in “some outlets, you will see our products like Uganda Waragi bearing tax stamps, being sold next to items that do not have”.

DTS was introduced in Uganda during the 2019/20 Financial Year as part of the Finance Ministry's Domestic Revenue Mobilization Strategy. The system was specifically designed to curb revenue leakages by ensuring that excisable goods are correctly taxed.
Across East Africa, DTS has been successfully implemented, with Kenya leading the way in 2013, followed by Tanzania and Rwanda in 2019.

Whereas the DTS success remains acknowledgeable, Mr Kilonzo said that compliance remains an uphill task, calling upon government to devise means to increase players, including a look into the reduction of costs.

“Maybe we need a different approach to get more players and drive up volumes,” he said.
On his part, Uganda Revenue Authority (URA) Commissioner General John Musinguzi Rujooki praised the digital tracking solutions for being instrumental in eliminating illicit products and creating fair competition, urging manufacturers to embrace DTS with focus on cleaning the market of illicit products and ensuring fair trade.

 “There are areas we need to study carefully, for instance, the manufacturers of Kombuchas were not paying any tax, but they were taking up the market where those who pay are supplying their products. They, therefore, had to comply with this new experience or close. That is good in achieving the intended objective to clean the market for tax-paid products and increase sales of those who pay tax,” he said.

A report by Euromonitor last year indicated that only 35.5 percent of alcohol, which translates to 543,331 litres, was legal. In contrast, 64.5 percent or 978,905 litres were illicit, and more than half of the 1.53 million were consumed between 2017 and 2020. 

Regarding the cost of stamps, Mr Rujooki also indicated there were provisions for a progressive reduction in the price that will be achieved as the country reaches certain milestones. 
“Every policy bears first and foremost the interest of the manufacturer. We shall … work together for the common interest.  Our contract with the provider details how the cost will be reduced as we improve compliance and hit the threshold. Every time we hit a milestone, we are in a position to negotiate,” he said, noting that they had already registered price reductions for spirits, beers, and Kombucha stamps.  

Digital tax stamps were implemented in 2019, with URA conducting many sensitization workshops for Ugandans to appreciate the importance of the stamps. However, reports indicate compliance remains a significant hurdle