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Manufacturing sector players have asked the government to reduce the cost of digital tax stamps (DTS) in a bid to drive usage by all targeted users. According to manufacturers, the high costs of digital tax stamps continue to be a barrier for some manufacturers.
Uganda Breweries Managing Director Andrew Kilonzo, during a media day engagement with business reporters and editors, said that the government’s earlier promise was that once all manufacturers embraced 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 levelled 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, digital tax stamps were rolled out in the 2019/20 financial year following the launch of the Domestic Revenue Mobilization Strategy by the Finance Ministry. DTS also aimed to address revenue leakages.
Digital tax stamps were rolled out in Kenya in 2013, while Tanzania and Rwanda launched them 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. The cost of the stamp for each category of goods has been set out in the respective regulations governing the operation of DTS for each country.
The DTS solution providers are the same across the region, but the cost of stamps differs significantly. The stamp fee is in addition to the excise duty tax payable under the country’s respective Excise Act.
In Uganda, DTS costs are UGX 110 (wines and spirits) and UGX 36 (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 business costs high. Hence, some manufacturers find 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 the 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 the production of alcoholic beverages.
Uganda Breweries invests UGX 52 billion annually in farmers who supply 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 working exactly 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. The plant is powered by locally sourced biomass materials and 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 our diesel generators for backup, but we are looking for a solution,” said Kilonzo.
Changing consumer patterns
Emmy Hashakimana, the Commercial Director at Uganda Breweries’ said customers’ consumption habits are becoming more occasion-led.
“Today, a consumer may drink a Tusker Lite; tomorrow, they do a Johnnie Walker, and on a weekend date, they will do a Baileys. There’s a new cohort of customers who are interested in the sweet flavours,” he said.