The Independent Uganda: You get the Truth we Pay the Price
Behind the performance
Local excise duty contributed a surplus of Shs107bn, which was mainly from mobile money transfers (Shs17.5bn surplus), phone talk time (Shs12.51bn surplus), beer (Shs27.7bn surplus), and Over the Top tax (Shs8.3bn).
The surplus can be explained by increased transactions via phones through voice and text owing to limited movement of people amidst the COVID19. Beer production increased by 7.34% in the period, which was matched by an increase of 6.5% in beer sales. VAT collections were above target by Shs179bn.
Cement contributed a surplus of Shs28.5bn, phone talk time, a surplus of Shs17.8bn, wholesale and retail a surplus of Shs22.6bn while spirits registered a surplus of Shs12.8bn.
The ongoing infrastructure developments in the country have boosted demand for cement leading to an increase in sales by 28.6%. The production and sale of spirits increased by 42.8% and 45.7% respectively, owing to spirits being a raw material to the highly demanded sanitizers.
In addition, the implementation of the Digital Tracking Solution (DTS) boosted collections and has aided the enforcement and tracking of locally manufactured and imported products.
Corporation tax registered a surplus of Shs35bn which is mainly attributed to URA’s pursuit of the alternative dispute resolution as a way of resolving outstanding tax matters. International trade taxes performed above target as result of the re-opening of economies and supply chains. Uganda’s imports grew by 31.8% in July to September 2020, compared to the same period in 2019.
Compliance interventions
In a bid to increase compliance and influence taxpayers’ behavior, officials said, various tax administrative measures have been implemented to support revenue generation. These include; integrity enhancement, voluntary disclosure, full implementation of compliance initiatives like the electronic fiscal invoicing and receipting solution, and the digital tracking solution, enforcement operations and alternative dispute resolution. Integrity enhancement has been upgraded and strengthened to focus on effective staff compliance management and zero tolerance to corruption. Staff are continuously engaged and urged to work with integrity, patriotism and professionalism.
Musinguzi said that since the tax authority started the voluntary disclosure, a total of Shs16.5bn has been recovered.
“We urge taxpayers to take advantage of the voluntary disclosure program at the earliest time possible before URA commences aggressive compliance actions,” the CG said.
Twenty new manufacturers who used to operate informally and unknown to URA have since been identified and registered for tax. Fifty manufacturers registered growth in excise duty of Shs6.1bn over and above their expected duty average growth rates. Twenty seven manufacturers registered growth in VAT revenue of Shs16.8bn over and above their expected average growth rates. Three importers registered growth in VAT revenue of Shs357million over and above their expected average growth rates. In addition, Shs975mn was recovered from enforcement activities due to non-compliance and under declaration of production volumes.
The manufacturers, importers, distributors and agents/traders are all encouraged to clear their stock of any unstamped goods.
“The public is also encouraged to lookout for unstamped gazetted goods because they potentially cause a safety risk,” Musinguzi said.
Meanwhile, customs enforcement measures countrywide led to a recovery of Shs14bn as a consequence of 1,468 seizures. Major offences were due to under-declaration at 67%, mis-declaration at 14.9%, other offences (inclusive of temporary road violations, transit violations) at 9.23%, undervaluation at 4.07%, outright smuggling at 2.90%, mis-classification 1.07% and concealment contributed the least at 0.44%.
The future
Going forward, Musinguzi said his administration will focus on integrity and accountability and leveraging on the use of technology and more.
Lakuma said, beyond this financial year, Musinguzi and his team need to swiftly implement the tax reforms proposed in the Domestic Revenue Mobilization Strategy (2019/20 – 2023/24). The reforms, he said relates to improving information technology, staffing system, customer satisfaction and more.
Lakuma said frequent changes in the tax policy should be avoided to enable investors plan well for their investments.
He said discretionary tax exemptions should be stopped and in the event that it is there, then, should be on the basis of jobs, skills and technology transfer and value addition to the entire economy.
In terms of new leadership and corporate governance at the tax authority, Lakuma said, the new team has started with good performance and there should be optimism that they will do a good job.
“They should be given support to execute their roles,” he said. “I support the new leadership 100% …one person cannot be there forever,” he said.
Musinguzi’s future plans and those suggested by Lakuma connect well with what the World Bank has said about Uganda’s tax policy and administration programmes.
In the 2018 economic update, titled; The Uganda Economic Update, Financing Growth and Development: Options for Raising More Domestic Revenues, the World Bank said at 14% of Uganda’s gross domestic product, tax revenue performance is too low to support the country’s development needs.
It said informality, tax exemptions, and inefficiencies in revenue collection deny the country up to 40% of revenue.
The bank calls for a reduction in tax expenditures, which have the potential to raise revenues by up to 5% of GDP annually, and enhancement of public awareness, transparency, and civil society engagement to increase voluntary tax compliance.
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