It is not all about tax revenue collection for Uganda Revenue Authority. Realizing the impact Covid-19 has had on businesses and the economy, the taxman has rolled out several business support tools to support the business community through the COVID-19.
During the end of year performance briefing to the media yesterday, URA Commissioner General John Rujoki Musinguzi said: “We have focused on positioning URA as business enabler; we have provided online tax education products like webinars every week and providing real-time 24hour service support to taxpayers, extended Tax filing deadlines for monthly and annual returns to encourage tax compliance amidst the pandemic, offered more convenient and flexible terms for instalment tax payment under MOUs. This was on a case by case basis, as well as extended the Voluntary Disclosure campaign to reduce the burden of tax penalties.”
He added: “URA opened up warehousing of all warehousable goods for a period not more than six months to give the owners enough time to mobilize money to pay taxes, suspended auction of goods that had exceeded the warehousing mandatory period, extended grace period for containers at the port from 9 days to 14 days. URA negotiated with Kenya Ports Authority for a grace period for free cargo clearance of Ugandan bound cargo. The free storage period was moved from 9 to 14 days effective Monday 18th May 2020.
Additionally, there is enhancement of more flexible and convenient payment methods to the taxpayer. These include the traditional direct bank transfers and deposits, Visa, mobile money, payway, AskURA App etc. These allow the taxpayer at all levels of income to make any payments using the most convenient method at any time and place, automated Withholding Tax (WHT) applications: So that beneficiaries apply online. Its validity has been extended to one year instead of 6 months to make it easier for the taxpayer to carry out business with certainty, automated Tax Clearance Certificate (TCC) application to make its issuance faster. Its validity has also been extended to one year so that the taxpayer does not have to apply for it every time they have a contract and speeding up refunds of excess input VAT, accompanied by targeted measures to limit fraud risks.
Musinguzi also revealed that Government remitted Customs Duty to 0% on inputs to manufacture essential medical products and supplies including masks, sanitizers, coveralls, face shields and ventilators for one year and has granted duty remission as specified to the Uganda list of all industrial inputs and raw materials for manufacture of goods to help manufacturers in the quest to boost production of the manufactured products in line with government policy on industrialization. For example packaging for medicaments, paper packs for manufacture of juice and milk, paper for exercise books etc.
Annual target
A Covid-19 economic slump led to revenue shortfalls in April, May and June but URA is recovering and its well on its way towards its annual target.
“We started FY2020/21 at the backdrop of a COVID-19 economic slump characterized by revenue shortfalls in April, May and June 2020. It has been very challenging both for the taxpayers and to URA. Nonetheless, we are steadfastly moving towards our annual target,” the commissioner general says.
Despite the significant revenue decline in April, May and June 2020 mainly due to the lockdown characterized by a slowdown in economic activities, the taxman saw signs of recovery and improvement from July to November 2020.
“From July to date, we’ve seen growth in revenue posting collections amounting to UGX 8.7 Trillion(By 29th Dec). In addition, since February we have recovered UGX 571.26 billion in arrears. This is remarkable performance for which we thank our taxpayers and we believe that they will support us to meet this target,” Musinguzi says.
Collections
Generally, the domestic revenue collectionstrajectory has maintained the growth tangent of the first quarter performance, showing signs of recovery in the months of July to December 2020 averaging at 2.548%. Specifically, September (9.9%) and November (7.44%) registered the highest growth in revenue while August (-2.16%) and October (-3.46%) recorded a slump in revenue collections.
Customs revenue collectionsregistered the first COVID-19 shocks in March 2020 with the disruption of international production and supply chains. April was the worst hit month with customs revenue declining by 46.48% compared to April 2019. However, in July – Dec 2020 we’ve registered signs of recovery with a growth of 7.94 % and 7.38% in customs revenue in August and September 2020. Our July to December collections have been above the set target for the period.
On the Taxpayer Register,the authority registered 92,578 new taxpayers (5.92% growth) between Feb – Nov 2020. This positive growth rate would have hit double digits but was handicapped by the COVID-19.
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Musinguzi noted that the recorded revenue performance was a concerted effort involving integrity enhancement measures, Voluntary disclosure, Electronic Fiscal Invoicing and Receipting Solution (EFRIS), Digital Tracking Solution/Tax Stamps and Alternative Dispute Resolution mechanism.
Integrity: “We have made Integrity a priority core value at URA and renewed our commitment to Professionalism and Patriotism. We are renewing the purpose that our staff attach to their role, as a service to their nation, and servants to Ugandans. We have upgraded and strengthened the staff integrity function with ZERO tolerance to corruption. Staff are continuously engaged and urged to work with Integrity, Patriotism and Professionalism which has reduced revenue leakage,” he says.
Voluntary disclosure: The commissioner general notes: “We have encouraged taxpayers to disclose information about their Businesses to URA without any prompting action by URA to enable them benefit from pardons on Penalty and Interest which would result from the tax offences. We have so far recovered over UGX 17.2bn from this program and we encourage more clients to use this opportunity before URA starts enforcement action.”
About the Electronic Fiscal Invoicing and Receipting Solution (EFRIS), URAhas registered a 93.7% performance in enrolling clients onto the Electronic Fiscal Receipting and Invoicing System (EFRIS). As of today 18,003 VAT registered taxpayers are enrolled on the system against a target register of 19,207.
“We have trained over 4000 clients including business communities, business owners, financial sector players and tax consultants to use the EFRIS system. These are in addition, to 13,312 non VAT taxpayers that we have enrolled on EFRIS against the targeted 32,519 non-VAT taxpayers,” Musinguzi says.
He adds: “Whereas we planned to have all VAT registered taxpayers onboarded on EFRIS by October 2020, our stakeholders requested for an extension due to implementation and integration challenges. We agreed with the taxpaying community to extend the implementation deadline by 3 months up to 31st December 2020 to allow clients to adjust and attend to the challenges. We have continued to train and give technical support to active EFRIS users. However, after 31st Dec 2020, URA will not extend further but will expect all VAT registered clients to be enrolled on EFRIS and to issue fiscalised receipts and invoices.”
Digital Tracking Solution (DTS): Between July and December 2020, URA has registered 145 manufacturers and 42 importers against a target of 107 and 33 respectively. As a result of the DTS URA has registered surplus in Local Excise Duty not seen in over 3 years.
Alternative Dispute Resolution: Collections from alternative dispute resolution to amicably settle outstanding tax matters were UGX 204.5 Billion by December 2020. It is a win-win solution to both the taxpayer and URA.
In addition, the surplus performance was also due to increased transactions via phone through voice and text owing to limited movement of people amidst the COVID-19. This contributed to the increase in Local Excise Duty collections, increase infrastructure developments that increased the demand for cement, hence increase in VAT collections on cement, increase on VAT on spirits due to increase in sale of spirits, a raw material to the highly demanded sanitizers as well as implementation of compliance initiatives boosting collections, and aiding enforcement and tracking of locally manufactured and imported products.
2021 Forecast
Emphasizing Patriotism, Integrity and Professionalism, Musinguzi says the authority will consolidate the gains made so far to create sustainable programs for clients as they strive to achieve the targets in the remaining part of the financial year.
“We will consolidate our gains to create sustainable programs that meet the needs of our various clients emphasized on Patriotism, Integrity and Professionalism,” he noted. Below is what the taxman looks to achieve in the remaining part of the financial year 2020/21.
- The revenue target for the second half of the FY 2020/21 (January to June 2021) is UGX 12,252.79 billion, which represent 62.20 percent of the annual target of 2020/21.
- Focus and commit on promoting accountability among our human resource to ensure that we all serve with Integrity, Patriotism, Professionalism and total commitment.
- Implementation of the Electronic Fiscal Receipting and Invoicing Solution (EFRIS), and encouraging all VAT registered Taxpayers to enrol for this solution before 1st January 2021.
- Increase the on boarding of clients on Digital Tracking Solution (DTS), and also increase coverage of more products and services.
- Enhancing rental revenue mobilisation using block chain technology (Rental Tax System)
- Enhanced use of technology to improve service delivery. The focus will be improved accessibility and simplicity of our services.
- Adopting the use of Alternative Dispute Resolution to amicably resolve tax disputes with taxpayers.
- Demystifying the tax regime and making it easily understood by everyone, through aggressive and elaborate tax education programs aimed at equipping our taxpayers with knowledge of both their rights and obligations.
- Continue to adopt the use of enabling technologies such as artificial intelligence and data analytics to identify potential revenue. (Surveillance for wider coverage of porous borders by use of satellite technologies, Regional Electronic Cargo Tracking System, drones and enhanced cross-border intelligence information exchange)
- Revamping the contact centre that will enable provision of real time service support to our clients.
- Collaborating with various stakeholders in the private sector and government agencies especially in areas of information exchange and system integrations to expand the tax register and accurately assess tax.
