Mr. Ssempogo

By Herbert Ssempogo

Arguably, one of the biggest nightmares traders contend with is unfair competition.

Often, the unethical acts, which gradually edge counterparts out of business, are linked to flouting of regulations.

For example, a trader could be a smuggler, skirting tax and, therefore, gaining undue advantage over others and denying the Government of Uganda revenue.

In the 2016/2017 financial year, the Enforcement Division of Uganda Revenue Authority (URA) made 7,257 recoveries from smugglers. From these, sh51.3bn was collected. A total of sh60.6bn was collected from 8,918 recoveries in 2017/2018.

Were the items not recovered, the challenge would have been double edged-unfair completion and revenue loss to traders and the Government respectively.

Other than smuggling, a trader could be selling counterfeit (look alike) or fake products. The effect of such unscrupulousness would be higher sales in part as a result of low prices.

And yet, the ordinary, uninformed person would rather buy a low priced item regardless of its quality or a trader’s compliance record.

The aforementioned unfairness is what has up until now happened to many a trader and the attendant undesirable impact. But soon, it will be a thing of the past.

In what is set to further help level traders’ playing field, authorities among them Uganda Revenue Authority, Uganda National Bureau of Standard and Ministry of Trade are soon introducing Digital Tax Stamps (DTS).

Not a new tax as some people have argued, the impending DTS involves the physical stamping of a product. The stamping is done at a production line where a stamp is affixed on a product or in a gazetted area for the case of imported excisable products.

At affixation, all details about a product are captured real time. This data will be accessible by revenue administrators, policy makers and consumers through mechanisms that will facilitate access to the information.

For example, using a smart phone to read the stamp, consumers will know an item’s details-name, importer/manufacturer and expiry date in real-time. This is the information captured at stamp affixation.

And that’s how unscrupulous traders will not survive since consumers will be empowered to only buy genuine products. Slowly, crafty traders, who have hitherto denied others business, will suffer the same fate.

Curbing unfair competition is merely one of DTS’ pluses. Others are reducing informality and enabling the Government make informed decisions based on captured data.

DTS will officially kick off with all cigarettes by the end of April 1st 2019. Beers will follow in May, 2019 while sodas, bottled water, spirits and wines will follow in June, 2019. The full roll-out is scheduled for July, 2019.

There will be two types of stamps namely paper for wines, spirits and cigarettes and direct marking for beer, water and sodas.

After the roll-out, enforcement teams will use specialised gadgets to determine the validity and authenticity of stamped products. Manufacturers, whose products do not comply, will be offered a grace period and an opportunity to comply.

Before the stamping starts, stakeholders will be sensitised. Amid these interactions, participants will familiarise with the stamps. Already, several sensitisation meetings involving manufacturers, URA and the Ministry of Finance, Planning and Economic Development have occurred.

The key argument in these interactions including several with Uganda Manufacturers Association members, is that the development is meant to reduce informality. Informality affects players as much as it affects Government’s activities for example revenue collection.

It will bring on board manufacturers and others, who have for a long time remained unknown, a state that facilitates non-compliance. Regulations among them tax.

Already, DTS are being used for similar reasons in neighboring Kenya.

Herbert Ssempogo works in URA – Media Unit, Public & Corporate Affairs