URA to collect Over Shs660 million in tax evasion penalties

Summary:

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  The Uganda Revenue Authority is cracking down on tax evasion related to the Electronic Fiscal Receipting and Invoicing Solution (EFRIS) and digital tax stamps. Recent enforcement actions include seizing alcohol lacking proper stamps, with penalties imposed on violators.

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The Uganda Revenue Authority (URA) is actively pursuing the recovery of over Shs660 million in penalties and back taxes from taxpayers who have neglected compliance with the Electronic Fiscal Receipting and Invoicing Solution (EFRIS).

Since 2019, vodka and whiskies, along with 11 other categories, have been mandated to carry tax stamps to ensure accurate excise duty payments. As of February 2024, 110 entities have been penalized for violating EFRIS regulations.

The enforcement efforts extend beyond EFRIS violations to breaches of the digital tax stamps system. In a recent operation, URA’s team in Arua seized over 8,000 cartons of vodka and whiskies lacking digital tax stamps from a concealed warehouse, projecting fines upwards of Shs50 million.

This crackdown on tax evasion responds to calls from the Uganda Alcohol Industry Association to combat illicit alcohol production, which not only evades taxes but also poses health risks due to the absence of quality checks.

To address these challenges, the Ugandan government, through URA and the Uganda National Bureau of Standards (UNBS), introduced the Digital Tracking Solution (DTS) in 2020. This system aims to curb illegal trade by ensuring all products have digital tax stamps for easy tracking and verification throughout the supply chain.

The broader revenue mobilization effort by URA, launched in January 2024, involves over 201 officers conducting spot-checks for EFRIS compliance, digital tax stamp usage, and investigating rental tax defaults. Enforcement actions target VAT taxpayers avoiding EFRIS enrollment and manufacturers failing to comply with digital tax stamp requirements.

Sandra Kaitare, Assistant Commissioner of the Petroleum and Mining Division at URA, emphasized penalties for non-compliance. VAT taxpayers face a monthly penalty of 6 million Shillings for avoiding EFRIS registration, while manufacturers failing to affix digital tax stamps risk fines and confiscation of goods.

Alongside vodka and whiskies, other products mandated to carry tax stamps since 2019 include beer, soda, bottled water, and various beverages and commodities.

Kaitare stressed that while penalties are crucial for enforcement, the primary goal is to ensure smooth business operations and promote fair trade practices. URA aims to reduce non-compliance, fostering a compliant and healthy business environment in Uganda.

With inputs from Agencies