EABC technocrats call for harmonisation of digital tax stamps costs

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The East African Business Council (EABC) has re-echoed the need to harmonise the cost of the Digital Tax Stamp (DTS) system with the East Africa Community Member States so as to improve revenue collection on excisable goods.

According to Frank Dafa, manager Trade Goods at EABC, whereas DTS has enabled governments to boost their revenue mobilisation, there are challenges faced by manufacturers in the implementation of DTS, such as the cost of stamps, equipment installation, and operation of the system.

Dafa was speaking during a Webinar on Thursday (today) between EAC and Ethiopian Manufacturers on the Implementation of Digital Tax Stamps (DTS) in the EAC Manufacturing Sector.

He urged the governments of East African Community (EAC) Partner States, through the revenue authorities, to consider a further reduction in costs by reviewing existing DTS contracts with a view to reducing the high excise stamp fees imposed on manufacturers.

“EABC's recent analysis shows that despite the solution provider of DTS being the same across the region, the cost of the stamp differs significantly in each country. The stamp fee is in addition to the excise duty tax payable under the country’s respective Excise Act,” Dafa noted.

During a presentation, it was also revealed that the cost of excise stamps is disproportionately apportioned to different products with no justification. The cost of the stamps paid by the manufacturers goes to the ‘foreign’ DTS provider/supplier and not to the government’s revenue authority.

“Wider public stakeholders’ engagement and inclusion of manufacturers’ input in the re-negotiation process of a better digital tax stamp system is important. We are asking partners to continue with sensitisation campaigns to create further awareness.”

Simon Kaheru, the EABC Vice Chairperson, in his submission, cautioned the member states against the differences in pricing of DTS equipment, challenging them to borrow a leaf from Ethiopia, which has been efficient in implementation.

“Two or so years from now, Ethiopia will join the EAC, we have heard how successfully the deployed DTS, we need to improve now so that we are uniform as a region. Ethiopia joining us brings new opportunities for a widen market, but are we ready?” Kaheru stated. 

Recently Juliet Nagginda, Senior Manager at Tax Services at PwC Uganda while presenting a report on the impact of DTS on the manufacturing sector said one of the key challenges that the manufacturers have highlighted was that for every sh100 Excise Duty they pay, they incur about sh16 to comply and this is the cost that they are bearing as they cannot pass it to the final consumer.

In Uganda, the use of DTS was rolled out in the Financial Year 2019/20 following the launch of the Domestic Revenue Mobilisation Strategy by the Finance Ministry. DTS was also aimed at addressing revenue leakages.

According to the Private Sector Foundation of Uganda (PSFU), Uganda’s stamp prices are 38% while Kenya and Tanzania are priced at 40% and 35% respectively, yet they have a similar supplier SICPA Uganda.