Digital Tax Stamp Faked, Four Arrested

Unscrupulous businesspeople are counterfeiting the Digital Tax Stamp, one of the measures launched by the government to crackdown on smugglers and frauds of fast-selling imported and local products. 

The stamp is an electronic machine-readable mark stamped on the targeted products, to authenticate their origin, manufacturer and tax-payment status. The system, jointly implemented by Uganda Revenue Authority, URA, and the Uganda National Bureau of Standards ensures quality standards, protects government revenue as well as protect genuine manufacturers from counterfeiters. Violation of the regulation attracts a 50 million Shillings penalty.

The URA Enforcement team has been tracking suspects for some weeks following information that some products had stamps which were not readable by the machines. The alerts on the prevalence of fake digital tax stamps were mainly concentrated in Southwestern Uganda with Star Waragi being the most pointed out brand.

Four officials attached to Parambot Distilleries have now been arrested after being found in possession of products affixed with the fake digital stamps. “Not before long into their search, the team landed on a batch of Royal Vodka with fake stamps in a shop in Kinyamaseke Trading Centre.

The team probed the shop attendant who frantically divulged information pertaining to the supply of these goods carrying fake digital stamps,” says the URA. The URA team in Mbarara posed as buyers and arranged to collect the products from the culprit in Mbarara for delivery to Kasese. The unsuspecting suspects loaded the cargo onto their delivery van registered UBF302V, which was later intercepted in Rwebikoona, Mbarara City with the products. The case has since been forwarded to the intelligence and legal teams for further management.

URA says that while on the whole there has been good compliance with the DTS system, there are some people who have started counterfeiting the stamp to dodge the regulations, hoping that it is more profitable than getting the products stamped.URA Acting Commissioner for Public and Corporate Affairs, Ian Rumanyika says there are two categories of persons violating the regulations, with some operating without the stamp while others are using fake stamps.  

When the DTS system was introduced, it faced a lot of resistance from the manufacturers of the targeted products saying it would increase the cost of doing business. The Uganda Manufacturers Association then demanded that the government foots the cost of installing the equipment for processing the stamp, and the whole process.

Following a grace-period and negotiations for a year, the business community agreed to comply. So far, URA has enrolled 232 businesses on the system including 185 manufacturers and 47 importers.

The had expected to register 107 manufactures and 33 importers in the first phase. Rumanyika says the resistance was due to lack of sensitization about the benefits of the move that includes protecting the genuine manufacturers, importers and distributors from counterfeits.

He, however, says that the stamp has also helped the consumers to gain confidence in the products because it is easier to prove that the product is authentic. The delays caused by the opposition from the business community saw the enforcement of the strategy take efforts only in October 2020.

So far URA has collected more than 3 billion Shillings in penalties on violators of the system, which so far is gazette for six types of products, mainly the fast-selling ones like beverages and tobacco. Rumanyika says following the successful implementation in the last for months, URA plans to expand it to cover more products, especially sugar and cement.

In a related development, the URA intercepted a truck in Kora, between Gulu and Omoro districts, with assorted contraband products.  The Karuma team gathered intelligence about a truck that was about to load assorted contraband items at a consolidation centre in Kora.

After two days of monitoring the truck, it was intercepted and verification revealed the products that included Lato Milk, Nodo Milk Powder, Al Mudhish Super Instant Milk Powder, Cerelac Nestel Infant Milk and other food foodstuffs.  URA adds that following the increase in taxes on imported garments on January 1 to about 35 per cent there has been an increase in smuggling of the imports, which necessitated the enforcement team to target them too.  

URN