Uganda Revenue Authority (URA) has registered a shortfall of UGX900.81 for the first quarter of financial year 2021/2022.
While presenting the revenue performance, URA Commissioner General John Musinguzi Rujoki said: “Uganda Revenue Authority was given a revenue target, by the Ministry of Finance, Planning and Economic Development, of UGX 22,363.51 billion which is 16.10% (UGX 3,100.51) higher than the actual revenue collection from the last financial year. As a result, in the last six months URA projected to collect 49.47% representing UGX 11,063.90 billion, an increase of 16.80% (UGX 1,591.43 billion) from the realised revenue for the same period last financial year,” adding:
“The net revenue collections for the first 6 months of this FY 2021/22 were UGX 10,163.09 billion against a target of UGX 11,063.90 billion, representing 45.44% of the annual target. A shortfall of UGX 900.81 billion was incurred with a performance of 91.86%.”
Domestic Taxes
Domestic tax revenue collections in the same period were UGX 6,229.62 billion against a target of UGX 7,180.94 billion, registering a shortfall of UGX 951.32 billion, and performance of 86.75%. The shortfalls were from direct domestic taxes (UGX 273.61 billion), indirect domestic taxes (UGX 487.20 billion) and Non Tax Revenue (UGX 190.51 billion). 20.03% of the domestic tax shortfall was from Non-Tax Revenue.
International trade taxes
Customs tax collections in the first 6 months of the FY 2021/22 were UGX 4,076.18 billion against a target of UGX 4,102.51 billion, posting a shortfall of UGX 26.33 billion, and performance of 99.36%. However, a year to year growth of UGX 389.78 billion (10.57%) was realized this year compared to the same period in the previous Financial year 2020/21.
Sector performance
During the period July to December FY 2021/22, 75.46% of the revenue was generated from the top 5 sectors. These are
The wholesale and retail trade sector which had the most significant contribution, amounting to UGX 3,031.01 billion (29.41%), manufacturing contributing UGX 2,413.36 billion (23.42%), the financial activity sector contributed UGX 1,064.43 billion (10.33%), information and communication sector contributed UGX 880.97 billion (8.55%) while Public Administration contributed 3.75%
“The revenue growth in the Wholesale and retail trade sector is attributed to the wholesale of solid, liquid and gaseous fuels and related products. The growth of revenue from financial activities is attributed to contributions by mobile commerce due to gazetted regulations by Bank of Uganda’s directive to all telecom companies to separate financial services from telecom services,” URA says.
During the same period, a number of sectors recorded a decline in revenue collection in comparison to FY 2020/21
They are; Information and communication declining by 14.55%; Electricity, gas, steam and air conditioning supply by 37.79%; Real estate activities by 10.78%; Construction sector by 14.06%
The decline is mainly attributed to a slow down in business in these sectors resulting from the COVID-19 pandemic impact.
Revenue Outlook
Going forward, URA says the revenue target for the second half of the FY 2021/22 inclusive of January 2022 is UGX 12,328.51 billion, which accounts for 55.13% of the annual target. For January alone the target is UGX 1,919.65 Billion, of which UGX1,791.55 billion had been collected by 31st January 2022 but before the final reconciliations.
Strategic Mitigation measures
The taxman says for the remaining part of FY 2021/2022, a number reforms will be implemented to increase the revenue target of 12,328.51 billion and grow the tax to GDP ratio by atleast 2%.
Bob Okodi, Amref Health Africa Uganda CFO, On Purpose-Driven Finance and Measuring Impact in Lives, Not MarginsTax register expansion.
As at end of January, URA had 2,063,462 taxpayers against a target of at least 5 million taxpayers on our register.
To grow the register, the tax authority says it will focus on the following measures; Enforce the tax laws, Increase tax education, Improve our client support and Integration with other government systems for 3rd party data integration and analysis.
This is in addition to improving the mobile tax offices to increase accessibility of our services. “Currently we have one bus called the Tujenge Bus. For the period under review, the total number of taxpayers registered on the mobile office stands at 1,634, and of these, 1,583 are individual registrations while 51 are non-individual registrations. We plan to have 4 mobile offices, each per region and Simplify our processes for instance the Instant TIN to ease registration,” URA says.
Strengthen the implementation of smart business solutions of Digital Tax Stamps and Electronic Fiscal Receipting and Invoicin Solution (EFRIS)
URA will also implement approved structures to ensure sustainability and expand on the traced and tracked products beyond the current eight products (cigarettes, beers, sodas, water, wines, spirits, sugar and cement). These solutions have grown the revenue contributions from the VAT and LED tax heads. The key features of track and trace capabilities, real-time exchange of production and transaction data, simplified bookkeeping to enhance business monitoring, quick processing of refunds, access to information at a click of a button and a comprehensive view of the business. These are all efforts towards curbing illicit trade and eliminating uneven playfields for taxpayers.
Accountability and transparency in efficient revenue management.
Among other measures, URA says it has committed to a new of mobilizing revenue for national development in an efficient and transparent manner. “Please hold us accountable to these new values.”
Tax dispute resolution through independent reviews and alternative dispute resolution.
The authority states that through the ADR mechanism, 3 (three) cases were amicably resolved outside the court process yielding UGX. 75.8Bn in revenue collected for the period 1st July 2021 to 31st December 2021.
Cumulatively, a total of 15 cases have so far been settled through ADR ever since the initiative was introduced in June 2020, and URA has so far collected revenue of UGX. 285.8Bn and USD. 10.4Mn. This initiative has proved to be very effective in resolving long-standing tax disputes. In addition, it has further improved the relationship between the taxpayers and URA since the ADR is conducted in an unbiased, non-confrontational and cordial environment.
“In addition, we have embarked on a cost-efficient service-centric approach by listening more to the concerns and being more responsive to clients concerns. We also encourage taxpayers to embrace the voluntary disclosure avenue by doing a tax health check and cleaning their tax account without waiting for penalties.”
