Impact of Digital Tax Stamps (DTS) on firms’ ex-factory prices, sales revenues, and excise tax revenues in Uganda
This policy brief assesses the effects of Digital Tax Stamps in Uganda, finding that by the second year post-implementation, they helped to increase excise tax revenues.
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Namunane Policy Brief September 2024.pdf
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- Uganda’s Domestic Revenue Mobilisation Strategy identified excise taxes as an area of revenue potential. However, the government lacked a track-and-trace mechanism to ensure that firms correctly reported their sales revenues.
- In FY 2019/20, the Ugandan government introduced Digital Tax Stamps (DTS) on some goods to minimise revenue leakage and under-reporting of excisable goods.
- This policy brief assesses the impact of DTS, finding that in the first year, it had negative effects on firm sales revenues and government excise tax revenues. However, by the second year, the gains, in terms of increased firms’ sales revenues, exceeded the firms’ behavioural response of decreasing ex-factory prices.
- Given these findings, efforts that can ease the adoption of the new technology and address implementation challenges are recommended.