KAMPALA — The Private Sector Foundation Uganda (PSFU) has released a report titled, “The impact of Digital Tax Stamp (DTS) in Uganda.” The report reveals that the implementation of DTS has led to an average 16% increase in operational expenses for manufacturers, 56% of manufacturers have experienced a surge in production costs, while 50% have reported diminished profitability. According to the report, the high costs of DTS have disproportionately affected Small and Medium Enterprises (SMEs) with limited capital resources.
However, the report also states that DTS costs have not affected consumer prices.
The report cites the closure of several businesses, including Global Distillers Limited, Four-Star Beverages Limited, and London Distillers Limited, among others, due to the high costs of DTS. The Uganda Alcohol Industry Association (UAIA) attributes these closures to the exorbitant costs of DTS, which vary across products, with wines and spirits incurring the highest costs at UGX 110 per stamp. According to URA, since its inception in 2019, DTS has also been a catalyst for significant investment and growth across various sectors, indicating a trend towards expansion and modernization. For example, Uganda Breweries Limited (UBL) made substantial investments in a new beer production line, facilitating local production of previously imported products. UBL also enhanced its spirits manufacturing capabilities, becoming a leader in the sector.
Although URA sets different prices for excise stamps based on the category of products, ensuring that the stamp price remains proportionate to the products’ retail price, PSFU Executive Director Stephen Asiimwe notes that Uganda’s stamp prices are higher than those in the East African region, despite sharing the same supplier, SICPA.
Uganda Breweries Limited Managing Director Andrew Kilonzo echoes this sentiment, calling for a review of the DTS implementation framework to minimize costs for manufacturers and importers. Currently, the cost of implementing DTS varies based on factors such as product type, production volume, and specific requirements mandated by the URA.
The URA says that it has progressively extended the scope of products subject to DTS, a decision driven by the positive outcomes observed from its initial implementation. This expansion from imported to domestic products, and now to additional categories, reflects the system’s effectiveness in enhancing tax compliance and curbing illicit trade across various sectors.