Africa-Press – Uganda. Uganda has been experiencing a challenging phase, with a rapid increase in funding needs but without a corresponding growth in the country’s resource envelope.
The situation is further compounded by a massive drop in donor assistance, which had, for a long time, helped cover funding gaps.
For years, Uganda’s tax to gross domestic ratio had stagnated at under 11 percent. It only started to grow recently.
However, at 13.9 percent, it remains below the National Development Plan targets of between 16 and 18 percent.
Donor assistance continues to decline, falling by 84 percent in two years from $905m in June 2023 to $146.4m in June 2025.
In 2019, the government, aware of the emerging revenue pressures, structured the Domestic Revenue Mobilisation Strategy, which identified measures to widen the tax base and close tax leakages.
The government identified excise taxes as one of the areas of high revenue potential, but also highly prone to leakages.
Isaac Arinaitwe, Principal Economist at the Ministry of Finance, notes that the introduction of Digital Tax Stamps (DTS) in the 2019/20 financial year was central to closing these gaps. DTS was rolled out first on cigarettes, beers, spirits, wines, soft drinks, other alcoholic beverages, and bottled water, before being extended to sugar, cooking oil, cosmetics, and cement.
The aim was to improve tax compliance and collections by giving the government and manufacturers a tool to track products from production to sale in real time.
Five years later, if there is a compliance challenge that Uganda Revenue Authority (URA) has managed to address, it is under the excise duty tax regime.
DTS has allowed URA to seal revenue leakages, monitor product flows in real time, and combat illicit trade. By the end of FY 2023/24, 1,249 taxpayers had been registered for DTS, of which 920 were manufacturers and 329 were importers.
Through enforcement operations, DTS contributed to the recovery of UGX 20.98 billion, while additional assessments and penalties amounted to UGX 16.17 billion during the same period.
On the recommendation of the International Monetary Fund, the government in November 2019 implemented a digital track and trace system that reflects production and sales details in real time.
The technology has protected government revenues, curbed counterfeiting, enhanced fair competition, and provided statistical data for both tax policy and administration.
Over the years, URA has recorded a substantial increase in compliance among taxpayers subjected to local excise duty.
In the four years, URA data shows, it has become more difficult for non-compliant businesses to bypass tax obligations, leading to higher compliance rates.
This has leveled the competitive landscape, allowing compliant businesses to compete fairly without the pressure of illegal underpricing by non-compliant counterparts.
By June 2024, DTS was tracking production and sales volumes of more than 12 excisable products in real time.
For instance, beer recorded an annual production volume of 445.7 million litres, of which an average of 406.4 million litres, or 91.1 percent, were sold. Drinking water and soft drinks, such as soda and juice, manufacturers produced an annual average of 731.1 million litres and 1.08 billion liters, respectively, of which 723.1 million litres (98.9 percent) and 1.04 billion liters (96.2 percent) were sold.
Between June 2021, an annual average of 306 million liters of cooking oil was produced; however, 88.9 percent of this, which represents 272.3 million, was sold.
The comparison between production and sales is key in taxing actual sales, which had previously been a challenge due to under-declaration.
Data also indicates that Digital Tax Stamps have been key in driving up production in the four years to June 2024, with beer, drinking water, soft drinks and juices, and spirits recording the most growth.
During this period, beer production grew from 346.9 million liters in June 2021 to 473 million liters in June 2024, while drinking water and soft drinks volumes grew from 493.4 million liters to 1.1 billion liters and from 762.8 million liters to 1.5 billion liters, respectively.
The growth has been driven by digitization and automation of production lines, which has reduced production losses and damages.
To further support the fight against substandard products and illicit trade, the Uganda National Bureau of Standards (UNBS) introduced the Digital Conformity Marking (DCM) programme. This provides a track-and-trace mechanism for consumers, supermarkets, and retail outlets to distinguish between certified and substandard commodities. The DCM programme issues Digital Conformity Marks to certified goods, offering consumers proof that the products meet applicable standards and are safe for consumption.
“These stamps contain information such as product details, the standard under which it is assessed, certification date, batch number, and manufacturer’s name. Supermarket owners, consumers, and the public can use the Kakasa App to scan these stamps and verify certification,” explained Sylvia Kirabo, Head of Public Relations and Marketing and Spokesperson, UNBS.
According to Isaac Arinaitwe, these combined efforts reflect more than just higher collections. DTS has closed revenue gaps and reduced illicit trade, while DCM has enhanced consumer confidence and brand protection. Together, they have created a more predictable environment for compliant businesses and safer choices for consumers. What began as a revenue safeguard is now a central pillar of Uganda’s broader tax modernization and market integrity agenda.
Source: Nilepost News
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