Uganda to improve tax compliance with digital tax programme

The Government of Uganda has reiterated its commitment to the Digital Tax Stamp (DTS) programme, highlighting its role in improving tax compliance and fair trade.

Treasury Chief Economist Isaac Arinaitwe explained that the DTS programme, which was launched in 2019, is important in enhancing tax transparency and encouraging lawful transactions.

“The DTS has supported timely and improved accuracy in the declaration and assessment of VAT and excise duty. Deliberate enforcement activities and stamp monitoring have created a compliance culture with the new system rules among taxpayers,” he said

Arinaitwe said the digital currency would help prevent counterfeit and unlicensed products, thereby protecting public health, improving product standards and curbing illicit trade.

Arinaitwe made the comments following a meeting between URA and British American Tobacco (BAT) officials, where it was decided to find ways to stop the illicit tobacco trade in the East African region.

At a meeting held at the URA headquarters, Nakawa BAT proposed several ways to prevent leaks, including the destruction of all tobacco by the public, managing records, compliance with Digital Revenue (DTS) and strengthening the production and supply chain to manage revenue.

Stating that the illicit cigarette trade increased from 15.8 percent in the fourth quarter of 2019 to 34.1 percent in the third quarter of 2023, Achola said: “The incidence of illicit trade in Uganda is 34 percent, which means that third batch cigarettes are smoked or sold illegally in Uganda without paying tax.

He noted that this increase is alarming and requires the full attention of the URA.

Governor John R. Musinguzi, for his part, praised the BAT team for their recommendations to curb the illicit tobacco trade and pledged to work towards the ban.

Security Assistant Godson Mwesigye said URA will require Ugandan tobacco companies to manufacture Bombas cigarettes and provide their batch numbers to URA to reduce illicit trade, adding that URA will use the solutions at DTS.