URA Destroys Beverages Found Without Digital Tax Stamps

Uganda Revenue Authority (URA) has destroyed 13,391 packages of assorted beverages, gins, kombucha and vodka that were seized for not adhering to digital stamps laws.

The destruction happened in Nakasongola on February, 21 2023, through an incineration method.

URA’s Manager Public and Corporate Affairs, Robert Wamala Lumanyika, who presided over the destruction said that URA issued several reminders to owners to go to Nakawa, claim their goods and affix digital stamps as stipulated by the Tax Procedures Code Act, in vain.

Currently, 13 products have been gazetted for digital tax stamps and they include beer, spirits, fruit and vegetable juice, soda, wine, mineral water, cement, sugar, cooking oil, any other fermented beverages, any other alcoholic beverages, any other non-alcoholic beverages and tobacco products.

“Each of these is supposed to affix a stamp failure of which the goods are confiscated. The cost of tax stamps ranges from as low as Ugx 13 per bottle of bottled water to shillings 60,000 for a bulker of cement. The Public should know that this is an allowed expenditure as one is accounting for their taxes,” Wamala said.

“Moreover, the owner can enter into a memorandum of understanding if such goods are confiscated, affix stamps and pay applicable penalties for not complying,” he added.

Products confiscated for noncompliance to Digital Tax Stamps requirements are kept in Nakawa for six months after which such goods are either auctioned or destroyed.

Wamala explained that this particular consignment could not be auctioned as the case for other goods because they need certification from Uganda National Bureau of Standards (UNBS).

“Products without DTS are believed to be substandard and therefore not fit for human consumption. Do you remember the recent deaths registered in Arua after consumption of a spirit called X-5, which had no digital tax stamps? It is such unfortunate incidents that we need to guard against,” Wamala said.

The DTS enforcement team has been impounding products that are gazetted for DTS but were not compliant. DTS was introduced on spirits and kombucha on 1st February 2022 and 1st  May 2022 respectively.

However, some of the unscrupulous manufacturers affixed fake digital tax stamps in contravention of the law.

According to the Tax Procedures Code Act, a person who prints over or defaces a tax stamp is liable to pay double the tax due or Ugx 20 million whichever is higher while one found in possession of goods which have no stamps is liable to pay double the tax due or Ugx 50 million, whichever is higher.

“Penalties are punitive because we want to deter persons from engaging in the practice. Many persons who deal in unstamped goods are actually engaged in counterfeiting thereby creating undue competition from those who engage in legitimate business,” Wamala said.

URA has tried to locate the manufacturers of these drinks but it is facing a challenge of culprits who keep changing their location and brands.

The URA operations are aimed at controlling illicit trade and ability to conveniently verify and trace all specified goods throughout the distribution chain.

In the first half of the Financial Year (July to December 2022), the manufacturing sector was second best contributor to domestic revenue with Ugx 2,702.90 billion (22.67%) collected.

Out of this, Local Excise Duty contributed 919.6 billion. In the same period, the DTS register grew with an addition of 957 clients, representing 751 manufacturers and 206 importers.