BY UGANDA VANGUARD
KAMPALA – Uganda government has introduced stamp duty on selected products a move critics says is to increase the cost of living which is already in bad shape. Stamp duty is a tax is levied on documents such as cheques, receipts, supplies to government, marriage licenses, and land and property transactions.
According to Uganda Revenue Authority (URA) spokesperson, Vincent Seruma the duty is to help reduce tax loss of US$100 million to US$150 million annually.
“The Prime Minister Dr Ruhakana Rugunda yesterday, Thursday 31stOctober 2019 convened a meeting of key stakeholders to reach a harmonized understanding over the introduction of the digital tax stamps. With effect from 1st November 2019, all the taxpayers dealing in the gazetted products whether locally manufactured or imported shall have their products affixed with Digital Tax Stamps,” said Seruma.
However, they have been given a three months’ grace period of up to 31stJanuary 2020 to finish all stock that does not have stamps in the distribution chain, Seruma told journalist Friday November 1st, 2019.
The meeting was attended by Chairman and representatives from Uganda Manufactures Association, Uganda Revenue Authority and Ministry of Finance, Planning and Economic Development.
Just like Oliver Twist, in the new move, government is asking Ugandans to dig deeper into their pockets and pay more stamp duty on the transfer and exchange of property this financial year.
Mr James Odong, Assistant Commissioner Process Management, URA list stamp duty on beers as (Shs55), cigarettes (Shs80), wines (185), soda (Shs20), spirits (Shs185) and water (Shs15).
It is not clear how much the increase will affect the market prices of the products.
He added, “All parties are to continue with engagements to resolve issues raised by the manufacturers to with URA to ensure smooth implementation of this initiative. In the same period, installation of stamp affixing technology will take place in the manufacturers and importers production lines.”
Odong said the stamp duty is combat counterfeit products on the market and protect consumers’ health and manufacturers’ earnings.
“It is also to enforce compliance through real-time and accurate declarations by manufacturers.
We therefore urge the public to support the implementation given the expected benefits.
URA will continually guide both the affected players in the market and the consumers of these products on what to expect going forward,” he added.
These changes are contained in The Stamps (Amendment) Act, 2016 that has increased the fixed, or minimum rate of stamp duty to Shsh10,000 from Shs5,000.
The minimum rate was last increased from Shs1,000 to Shs5,000 in 2002.
Furthermore, Stamp duty which is applicable on exchange of property has been increased from 1% to 2% of the total value.
This means that any property transfers concluded on 1 July 2016 and after will be subject to the stamp duty of 1.5% on the value of the property that is being transferred.
The new rates are still favourable compared to some of Uganda’s neighbours, such as Kenya, where transfers of urban property are subject to stamp duty rate of 4%.