The Independent Uganda: You get the Truth we Pay the Price
Commissioner General Doris Akol outlines plans for the FY 2019/2020
Kampala, Uganda | JULIUS BUSINGE | Uganda’s tax collection grew at an impressive 14.9% above target to Shs16.6trillion in the last Financial Year, the fastest pace recorded in the last four years.
Results released on July 15 shows that the Uganda Revenue Authority (URA) executives have a reason to smile having bounced back from a revenue collection deficit of Shs606bn recorded in the FY2017/2018 to a surplus of Shs258bn in FY2018/2019.
URA last recorded a huge surplus in revenue collections in the FY2014/15 when it recorded a Shs139bn surplus.
Doris Akol, the commissioner general at the URA told journalists that the good performance was supported by positive economic growth reported at 6.1% in FY2017/2018 against a projection of 6%.
Both domestic and international taxes performed well. Domestic taxes net collections during the year were Shs9.7trillion, registering a performance of 102% and Shs265.59 billion above the target.
The major tax heads that recorded gross surpluses during the year were majorly direct taxes that include; corporation tax that registered a surplus of Shs331billion mainly attributed to the transport, storage and communication sub sector as well as the financial intermediaries and PAYE that registered a surplus of Shs148billion mainly attributed to the public sector that performed at 127% of target.
The tax body saw major revenue contributing sectors registering positive growth during the year including mining and quarrying (17.6%), trade and repairs (6.6%), construction (5.7%), manufacturing (4.4%), financial and insurance activities (8.3%) and public administration (10.6%).
On the other hand, the net international trade tax collections during the year were Shs6.8trillion registering a performance of 100% and Shs0.34 billion above the target.
Akol said the major tax heads under customs that registered good performance during the financial year were; import duty that performed at 100.71% of the target and VAT on imports performed at 102.62%.
In terms of import volumes, Uganda’s dry cargo – this excludes fuel –import volumes in local currency grew by 28.54% during the FY2018/19 compared to 16.30% last financial year FY2017/18.
The growth in import volumes led to the growth in goods that attract VAT on imports by 8.17%, goods that attract import duty by 1.62%.
The major import items that registered increase in tax yield during the FY2018/19 compared to last year include; worn clothing reported at Shs42billion, cigarettes Shs29billion, motor vehicles Shs28billion, foot wear Shs27billion. Performance in these areas enhanced international trade tax revenue collections which led to a surplus of Shs8.91billion.
New tax measures
Akol said that the proposed tax policy measures for the year that were majorly under income tax, local excise duty, VAT, customs-non-tax revenue, customs and excise-customs, performed well.
Some of the popular measures introduced under the local excise duty included a levy of Shs200 on Over the Top services (social media access) and levy of 1% on mobile money transactions – that later reduced by half. Total net revenue collected from these measures was Shs779billion.
Future prospects
Akol said the new target of Shs20.3trillion for the new Financial Year will depend on the performance of the economy, changes in the proposed tax measures by the government in addition to compliance levels by taxpayers.
“We have an issue with those that comply and fall off; those that file and don’t pay and others that do not pay at all,” she said.
In order to deal with this scenario, she said the URA supports an ongoing multi-sectoral approach being implemented by the government to deal with businesses in the steel sub-sector that have reportedly been under declaring their performances.
She also noted that telecom companies are progressively becoming more compliant after the government started to monitor most of their transactions.
As the New Year goes by, Akol said they will continue with the implementation of the current URA Corporate Plan 2016/17-2019/20 that is premised on three major areas of cultivating a taxpaying culture through provision of reliable services, leadership development and building strategic partnerships.
Akol said they will focus on the implementation of digital tax stamps, electronic physical devices, taxpayer education and facilitation, establishing an integrated government to foster domestic revenue mobilisation efforts, leveraging data on revenue intelligence, improved border management, improved staff capacity and productivity, strengthening science investigations and legal service function.
URA’s good performance and plan for the new year comes as the World Bank report titled ‘improving taxation to finance Uganda’s development’ published in May 2018, suggest that up to 5% of GDP is lost annually in tax leakages yet Uganda’s tax system is one of the most modern in the region.
“Tax avoidance and evasion, partly resulting from generous tax exemptions to investors, weak tax administration, and a large informal sector pose challenges to increasing revenues,” the report reads in part.
The report further notes that Uganda could widen its tax base by tapping into areas that are outside the tax net; applying tax instruments correctly and fairly; improving efficiency, transparency and accountability in tax administration; and delivering better public services.
“Making more people and firms pay their taxes rests on improving delivery of public services, and requires government to close loopholes and stop discretionary tax exemptions. Citizens are more likely to pay tax if they see public services improve,”said Christina Malmberg Calvo, World Bank Country Manager for Uganda in the report.
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