Manufacturing sector players have asked Gov’t to reduce the cost of Digital Tax Stamps (DTS) in a bid to drive usage, by all the targeted users. According to them, the high costs of digital tax stamps continue to be a barrier for some manufacturers.
The Uganda Breweries Managing Director Andrew Kilonzo during the media day engagement with business reporters and editors said that the earlier promise was that once all manufacturers embrace digital tax stamps, the cost of the stamps would reduce but that has not been achieved.
“The promise of the system was that all manufacturers would get into the system and ensure a leveled playing ground. However, in the outlets, you will see our products such as Uganda Waragi bearing tax stamps, being sold next to items that do not have,” he said.
In Uganda, the use of DTS was rolled out in the Financial Year 2019/20 following the launch of the Domestic Revenue Mobilization Strategy by the Finance Ministry. DTS was also aimed at addressing revenue leakages.
In Kenya, DTS were rolled out in 2013 while Tanzania and Rwanda both launched DTS in 2019. While the intention behind these measures is commendable, the varying costs of digital tax stamps across the region have created a complex business environment. For each country, the cost of the stamp for each category of goods has been set out in the respective regulations governing the operation of DTS.
The solution providers of DTS are the same across the region, but the cost of stamps differs significantly. The stamp fee is additional to the excise duty tax payable under the country’s respective Excise Act.
In Uganda, DTS costs are at UGX 110 (wines and spirits) and UGX 36 for beer; in Kenya DTS charges are UGX 134.88 for wines and spirits and UGX 80.93 for beers. Tanzania’s charges for DTS are UGX 51.75 for wines/spirits, UGX 23.02 (for locally produced beers) and UGX 27.58 (for imported beers) while for Rwanda, DTS charges are UGX 761.13 and UGX 152.23 for spirits and wines respectively.
According to Kilonzo, the high cost of digital tax stamps keeps the cost of doing business high, hence some manufacturers find a value in avoiding the stamps. “Maybe we need a different approach, if you bring down the cost of digital tax stamps, it stops being a barrier and you get more players embracing it hence driving volumes up.”
Support to farmers
Kilonzo said that through Farm for Success Program, Uganda Breweries is supporting people in farming communities who supply the organisation with raw materials such as sorghum and barley used in alcoholic beverages production.
On an annual basis, Uganda Breweries invests UGX 52b in farmers involved in the supply of raw materials.
“We are touching the lives of at least 50,000 farmers; we work with the National Agricultural Research Organisation (NARO) to improve the yields; we were very excited when the government came with the Parish Development Model (PDM) because we are exactly working with people in communities” he stated.
Decarbonising efforts
In April 2024, UBL commissioned a state-of-the-art UGX 37 billion biomass plant.
The facility represents a substantial investment by UBL and excellent progress in its decarbonising journey. Powered by locally sourced biomass materials, the plant also exemplifies UBL’s dedication to harnessing sustainable manufacturing while offering livelihood opportunities to local communities.
“We have cut our carbon emissions by 92% and by 2030, we want to be carbon neutral; we are almost there. What’s remaining is for our diesel generators for backup but we are looking for the solution,” said Kilonzo.
Changing consumer patterns
Emmy Hashakimana, the Commercial Director at Uganda Breweries said customers are becoming more occasioned while consuming alcoholic beverages. He said they will consume a certain product depending on the nature of the day.
“Today he may drink a Tusker Lite, tomorrow he does a Johnnie Walker and on the weekend date, he will do a Baileys. There’s a new cohort of customers who are interested in the sweet flavors.”
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