INTERVIEW: URA’s Agnes Nabwire talks about the need for Science in Revenue Administration Traditionally, tax administration is expected to be driven by Accounting and Economics. However Uganda revenue Authority (URA) notes that there is need to improve revenue collection, lifting Uganda’s tax-to-GDP ratio to between 16-18% or more within the next five financial years and hence the need for new and innovation interventions provided by Science. In this interview, Agnes Nabwire, Acting Commissioner Tax Investigations, explains how URA is integrating Science in Revenue Administration

What is this Science that you are integrating with Revenue Administration?

Study of the structure and behavior of physical and natural systems through observation and experiment. It is based on facts and natural principles. While there are many science fields, in URA we employ generally 3 broad science disciplines i.e. Forensic Sciences which in itself comprises digital and document examination.

On the other hand, we have analytical and applied sciences. Under analytical Sciences we undertake Laboratory analysis of trade items to identify the nature of goods and their composition. Applied sciences uses scientific method and knowledge based on natural laws like matter can neither be created nor destroyed but changes from one form to another.

Traditionally, Revenue Administration is assumed to be driven by Accounting and Economics fields of study. Why then employ Science in this revenue administration space?

Like the Domestic Revenue Mobilisation Strategy notes, there is need to improve revenue collection, lifting Uganda’s tax-to-GDP ratio to between 16-18% or more within the next five financial years, to encourage issues of fairness and transparency among other things. Such progress has been hindered by;

• Aggressive tax avoidance, evasion and fraud schemes that exploit loopholes in policy and regulations. 
• Rapidly changing nature of trade and technology driving the economy.
• Technical tariff barriers created by need to verify increasingly changing goods. These affect trade flows.
• Increased abuse of preferential treatment regimens to mention but a few.

These and more challenges require new and innovative interventions which are provided by Science.

So, how does Science then address these revenue mobilization challenges?

Science is based on generally applied principles and facts that are largely indisputable and verifiable. On this basis,

• It is used to verify manufacturers that apply for preferential tax treatment provided by government to support local industry and promote export such as BUBU for local content programs and such as BUBU or duty drawback of taxes paid on raw materials used to manufacture an export product.
• Facilitates trade through providing an objective result on the nature and composition of traded goods. This helps customs to correctly classify goods and apply the correct rate.
• It provides policy formulation support; by identifying potential loopholes that may be exploited for aggressive tax avoidance purposes.
• Digital Forensics techniques and/or tools provide URA with an unprecedented level of visibility in regard to taxpayer transactional data and fraud scheme information such as sales suppression.
• Document Examination helps in identification of forged, altered and falsified documents. Such documents include motor vehicle log books, invoices etc. These are important in assessing how much tax has to be paid.

A good revenue administration is one that strikes a balance between government and tax payer interests. How does Science contribute to this mutual benefit arrangement?

• Science in conjunction with Customs helps to protect society from harmful substances. Some of these include cosmetics with hydroquinone, explosives and banned substances.
• In facilitating trade, Science acts as an objective tool for dispute resolution between the tax payer and the administration. This is usually conducted in our Lab. Facility and input output analysis.
• Given that Science-led audits often require an in-depth study of the taxpayer’s value chain and value addition process, they lead to productivity gains. During the process tax payers are able to identify gaps in their systems that lead to waste and needless process loss.

How does the Science function relate with other MDAs given that some of them do what might appear as similar work? UNBS is a good example of this.

The Science function operates in collaboration and/or partnership with a number of agencies. Indeed, it has become the focal point for Science related MDAs within URA. Scientists represent the administration on a number of technical committees that are established under various agencies such as UNBS, NEMA, NDA, Ministry of Agriculture and Animal Industry and Fisheries, Uganda Police Force, IGG etc. Globally we have strong ties with the Organization for the Prohibition of Chemical Weapons (OPCW), African Tax Administration Forum (ATAF) among others.

It is important to note that Science may deliver a service that compliments that of other agencies (such as UNBS). However, this is done only to the extent that it falls within URA’s mandate of revenue administration and mobilization.

Now that we understand the full extent of application of Science in revenue administration, how have you set up to provide the explained value proposition?

First, we have put together a team of Scientists assembled from different disciplines (i.e. specialists in applied Sciences to Forensic analysts). These are highly trained and dedicated individuals with the right professionalism and integrity to deliver on Science’s value proposition.

In addition, URA has set up two world class laboratories (i.e. analytical and forensics labs) under its Science Center facility. These are equipped with some of the latest equipment to allow for fast but reliable analysis as required.

Is it possible for a tax payer to access and/or use these facilities in a private capacity?

At the moment these facilities are reserved solely to serve URA and the demands of revenue administration. None the less, there are plans to open them up for general public use but such consultancy framework is still under development.

Given that the application of Science is a relatively new idea and/or approach, what plans do you have to further integrate it in revenue administration?

There are a number of strategies that we are looking at implementing or are currently piloting. These include;

• Enhancing the capacity of our Forensics and analytical laboratories through acquisition of more robust and advanced equipment. This will enable us keep up with changes in technology and the dynamic revenue administration needs. Such changes/demands include changes in business information storage i.e. use of cloud-based platforms, evolution of fraud schemes and rapid changes in composition of trade items.
• Expanding the geographical coverage and reach of these services. At the moment, our testing facilities are centrally located. This limits our capacity to deliver timely service for free-flowing trade. Therefore, we are looking at taking advantage of the facilities available at the One Stop Boarder Points as points of access to Lab. services.
• Allowing access to our world class services by private persons through the consultancy framework discussed hitherto.
• Undertaking more proactive approaches to ensure enhanced tax recovery during audits.

Concluding Remarks

In general, application of Science is a relatively new idea and innovative approach to tax administration. With its application URA has benefited from a reduction in the cost of doing business, enhanced audit outcomes while its effectiveness in curbing non-compliant behavior has significantly improved. This effort resonates with commitments of Uganda’s Domestic Revenue Mobilization Strategy.