A recent Ministry of Finance Background to the Budget report highlighted the positive impact of digitizing tax systems on manufacturing efficiency and production up to June 2023.
Notably, the implementation of digital tax stamps and related enforcement mechanisms has significantly improved the declaration and payment of local excise duties. This improvement led to revenue surpluses and increased production volumes for several gazetted products.
Specifically, revenue from products like spirits and beer contributed to a surplus of Shs36.44 billion in local excise duty during the period, accompanied by substantial growth in production volumes across various product categories.
Beer production surged by 81.30 percent to 516.4 million liters, while soft drinks saw a 25.64 percent increase to 918.2 million liters. Additionally, spirits recorded a 22.7 percent rise to 101.7 million liters. However, declines were observed in cement, sugar, and wines.
The government’s reliance on digital tax solutions, including tax stamps and electronic fiscal receipting and invoicing solutions, aims to enhance tax collection and administration. These efforts have resulted in a 30 percent increase in tax revenues from digital tax stamps, reaching Shs963.38 billion.
The expansion of the digital tax stamps register, with an increase from 40 to 1,201 taxpayers, demonstrates the effectiveness of these measures in improving tax compliance. Furthermore, the Ministry of Finance report highlighted the positive impact of digital tax transformation on the tax-to-gross domestic product ratio, surpassing initial projections.
The implementation of digital tax stamps by SICPA has played a crucial role in enhancing tax compliance and ensuring product quality standards in the market.
The government remains committed to supporting the digitization of the tax system to achieve improved tax efficiency and administration. URA Commissioner General John Rujoki Musinguzi emphasized the role of digital tax solutions in revenue optimization and closing tax leakages during the recent Review of Resource Envelope for the 2024/25 financial year workshop.
