Officials from the Private Sector Foundation of Uganda (PSFU) and the Uganda Manufacturers Association (UMA) have asked the Government of Uganda to harmonize the costs of Digital Tracking Solutions (DTS), also known as Digital Tax Stamps, with its East African Community (EAC) counterparts to ensure fair competition.
They made this request during an interface with MPs on the Parliamentary Committee on Finance on October 30, 2024.
“Members of the manufacturing sector have consistently supported the Government’s efforts in implementing DTS. However, the current fees are excessively high, leading to elevated operational costs for the sector,” Byaruhanga stated.
Sources at the Uganda Revenue Authority (URA) say higher DTS costs in Uganda reflect unique technological customizations and service levels required to meet local market needs. The DTS system has enabled improved compliance, greater transparency, and significant expansion in the number of registered manufacturers and importers since 2019.
Despite concerns about the financial burden, manufacturers clarified that the costs associated with DTS have been absorbed within the supply chain rather than passed on to consumers. This aligns with findings by the International Tax Stamp Association, which confirm that the additional costs of DTS have not led to retail price increases, mitigating consumer impact.
Although PSFU and UMA raised concerns about business closures, data shows that the manufacturing sector has grown since the rollout of DTS. Companies such as Crown Beverages and Uganda Breweries have made significant investments, demonstrating how DTS has fostered modernization and curbed illicit trade while boosting legitimate production.
Juliet Nagginda, Senior Manager at PwC Uganda, emphasized that manufacturers incur compliance costs amounting to Shs16 for every Shs 100 in excise duty, making it challenging to absorb these costs due to the sensitivity of consumer goods. However, The Chairman of the Parliament Finance Committee, Amos Kankunda noted that the Government continues to explore ways to streamline the process to ease the burden on businesses.
MP Kankunda assured stakeholders that the Committee would engage the Government to resolve the issues raised, ensuring continued productivity within the manufacturing sector. DTS was introduced during the 2019/20 financial year under the Domestic Revenue Mobilization Strategy to address revenue leakages.
