Uganda Revenue (URA) collected net revenue of UGX 19.263 trillion and posted a growth in revenue of 14.99% in the Financial Year FY 2020/21, comparison to the FY 2019/20 and an estimated tax toGDP ratio of 12.99 percent.
In real terms, Commissioner General John Rujoki Musinguzi says this reflects a growth in revenue of UGX 2.511 trillion and a growth in the Tax to GDP ratio by 1%.
The outturn of the FY 2020/21, however, is short of the target of UGX 21.638.65 billion by UGX 2.375.65 trillion.
While presenting the FY2020/21 performance results, Musinguzi noted that this was the target approved by Parliament before the impact of Covid-19 set in and macroeconomic variables that affect revenue such as GDP growth were projected at 6% yet by the end of the financial year GDP growth was at 3%.
Domestic revenue
The authority recorded Domestic revenue collections of UGX 12,144.01 billion, registering a growth of 13.71% (UGX 1.464.19 trillion in real terms) in comparison to the FY 2019/20, though these were below the target of UGX 14.038.18 trillion by UGX 1.894.18 trillion.
On the other hand, customs revenue collections were UGX 7,505.86 billion against a target of UGX 8,001.35 billion, registering a significant growth of 16.43% (UGX 1,059.27 billion) in comparison to FY 2019/20. However, the collections were UGX 495.48 billion below target.
Sectoral performance
The Commissioner General revealed that 71% of the revenue was generated from the top 4 sectors with wholesale and retail trade sector having the biggest contribution of UGX 5.783.69 trillion (29.43%), followed by manufacturingwith UGX 4.461.29 trillion (22.70%). The Information and communication sector contributed UGX 2,059.83 billion (10.48%), while UGX 1.643.54 trillion (8.39%) was generated from the financial and insurance services sector.
The taxman notes that there was a growth in revenue from key sectors like manufacturing which grew by 27.52%, Information and communication by 25.73%, wholesale and retail by 19.13% and financial and insurance services by 5.55%.
On the other hand, there was a decline in revenue collected from some sectors in the FY 2020/21, compared to 2019/20. Revenue from Accommodation and food service activities declined by 37.38%, Education sector by 10.35%, Arts entertainment and recreation by 31.39%. The decline is attributed to slow down in business in these sectors resulting from COVID-19 pandemic impact.
Regional performance
In regards to the EAC region, URA had the highest year on year revenue growth (14.99%). Tanzania collection in FY 2020/21 was less that that collected in FY 2019/20 by 0.1%. Kenya, Burundi and Rwanda Revenue Authorities met their targets in the FY 2020/21, but it should however be noted that these were set in consideration of the Covid-19 impact.
How EFRIS, DTS boosted performance
Musinguzi reveals that Debt recovery of UGX 1,024.38 billion mainly attributed to Alternative dispute resolution (ADR) contributed over UGX 365 billion, the voluntary disclosure initiative, close monitoring of Memorandum of Understanding (MOUs) for installment payment, and enforcement mechanisms among others.
Additionally, the implementation of the Digital Tracking Solutions (DTS) and the Electronic Fiscal Receipting Solution (EFRIS) boosted performance.
“DTS contributed to the 16.89 percentage growth in Excise Duty collections by aiding the enforcement and tracking of locally manufactured and imported goods. EFRIS contributed to the 14.73 percentage growth in VAT collections, through relaying real-time taxpayer transaction details to URA, thereby minimizing underreporting of VAT collected from consumers. It should be noted that both technologies are still being rolled out and not yet fully enforced.
Further on the tax administration front the growth in revenue is attributed to the quick response by revamping the online services to taxpayers such as different payment modes, online taxpayer education campaigns ( KAKASA), improved contact center (IVR) (Toll free lines 0800-117000 / 0800-217000), faster clearance of refunds, introduction of a bonded warehouse information management system (BWIMS), simplification of the TIN application process, automation of the WHT exemption and Tax clearance certificate (TCC) issuance and many others.
Customs revenue collections grew by 16.43% mainly due to a growth in imports by 37.38% in the FY 2020/21 compared to FY 2019/20. It should also be noted that only about 23% of total imports are dutiable. In the FY 2020/21, there was global re-opening of economies and supply chains.
New tax administration measures announced through the budget speech of FY 2020/21 that included EFRIS, DTS, scanners, debt recovery, use of GPS and data analysis among others yielded revenue of UGX 1.111.01 trillion against a target of UGX 548.00 billion, performing at 202.74%.
While new tax policy measures implemented in the FY 2020/21 yielded net revenue of UGX 260.35 billion. The measures were majorly under; Income tax, Local Excise Duty, VAT, and Customs.
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The adverse impact of COVID-19 pandemic, which led to a slowdown in activities in some key sectors like education, accommodation and food services, among others.
“PAYE was one of the major tax heads affected leading to shortfall of UGX 315.51 billion, mainly due to scale down in number of employees by some organizations. The corporate tax collections were also below target by UGX 239.93 billion, owing to losses made in the adversely affected sectors,” Musinguzi says.
Tax administration interventions such as audits, taxpayer compliance visits, debt enforcement were all slowed down and for some months stopped because of the observation of SOPS.
Expanding taxpayer register
During the FY 2020/21, 189,377 new taxpayers were added to the taxpayer register. By the end of the FY 2020/21, the taxpayer register had 1,783,493 taxpayers. In addition, process improvements were undertaken like the Tax Identification Number (TIN) registration which has been simplified, from excel templates into a simple single web form to facilitate taxpayer registration. This has further been linked with the NIRA database to make it easier to register for tax once you have a NIN.
Customs and trade facilitation
URA has initiated the second phase of the Customs Business Systems Enhancement. The aim is to harmonize customs procedures and systems to improve cross border trade, collaboration between Government agencies, clearance time, reduce cost of doing business
Implementation of the Uganda Electronic Single Window (UESW). A Single Transaction Portal developed and rolled out/deployed. The benefit of the single window is that traders submit once, documents and or information to all border regulatory agencies. This reduces transactional time and cost.
With the outbreak of COVID-19 in 2020, URA improved the Regional Electronic Cargo Tracking System (RECTS) by enabling it with the driver tracking module. URA is able to monitor 72 percent of the goods being processed from the port of Mombasa and also support driver tracking and their contacts as we fight the COVID-19 pandemic.
Enforcement interventions.
Customs enforcement operations;
During the FY 2020/21, URA says these led to a recovery of UGX 67.73 billion as a consequence of 5,823 seizures. 4,843 seizures were issued on dutiable goods and 980 seizures were issued on non-dutiable goods. Major offences were due to under-declaration at 59.39 percent, mis-declaration at 18.38 percent, other offences [Inclusive of; temporary road violations, transit violations,] among others.
Litigation
A total of over 259 cases were filed of which 231 were civil and 28 criminal cases. During the financial year 2020/21, 65 cases were ruled in favor of URA while 20 were in favor of the taxpayers.
In addition, we have introduced the Alternative Dispute Resolution (ADR) mechanism where cases are amicably resolved outside court. This initiative yielded UGX 365 billion in revenue collected since the beginning of the Financial Year 2020/2021 thus unlocking revenue that had been locked in some of the Court cases with some of our Large Taxpayers. We intend to continue pursuing this approach in the FY 2021/22, since it provides a win-win solution to the taxpayers and URA.
Outlook
Of the revenue target approved by Parliament for FY 2021/22 of UGX 22,425.37 billion, Uganda Revenue Authority has a task of mobilising UGX 22,363.51 billion. This is an increase of UGX 3,100.51 billion compared to the revenue collected in FY 2020/21.
URAs new transformation journey sets the premise for which this great institution shall endeavor to boost her revenue mobilization efforts in a strive to free our Country from donor dependency, encourage a healthy flow of investment, and address fairness and transparency in the tax administration system.
