Uganda Revenue Authority (URA) announced last week that for the financial year 2022/2023 it had collected UGX 25,209.05 billion⏤an extra UGX 57.48 billion against a target of UGX 25,151.57 billion, reflecting a performance of 100.23%.
This follows a 16.4% growth in revenue collections (UGX 3,551.04 billion) from the UGX 21.062 trillion registered in 2021. The year before that, revenue collections grew 12.14%.
This performance, the tax authority attributed to “an intensive agenda to grow local revenue mobilisation” in which “URA employed a number of measures such as automated ledger reconciliation, the EFRIS and DTS solutions”.
This is the first time in 5 years that the tax body has registered a full-year surplus performance. The last time this happened was in 2018/2019 during the leadership of former Commissioner General, Doris Akol. After that tax collections were hit by the Covid-19 epidemic.
Although, URA under Commissioner General John Musinguzi, who joined in March 2020 has consistently registered revenue growth⏤ 14.99% in FY 2020/2021; 12.34% in FY2021/22 and now 16.4% in FY22/23, this is the first time the revenue authority is hitting its annual target. In FY2020/21, Rujoki’s first full year, performance was at 89.02%; FY2021/22 at 96.85% and 100.23% for FY2022/23.
Domestic tax revenue collection
“In the fiscal year of 2022/23, the total domestic revenue collected was UGX 16,425.41 billion, surpassing the target of UGX 16,188.51 billion by 101.46 per cent and resulting in a surplus of UGX 236.89 billion. This represents a growth of UGX 2,761.52 billion (20.21 per cent) compared to the previous fiscal year. Direct domestic taxes collected exceeded the target with a surplus of UGX 724.62 billion, while Non-tax revenue, including stamp duty and embossing fees, generated a surplus of UGX 65.81 billion. However, indirect domestic taxes fell short of the target, with a deficit of UGX 553.54 billion,” URA said in a statement.
International tax revenue collection
In terms of international tax collections, a total of UGX 9,326.64 billion was collected, which is slightly below the target of UGX 9,462.70 billion (a UGX 136.05 billion deficit). This however is a a decent 98.56 per cent performance. Important to note, is that there was a notable increase in revenue growth of UGX 892.47 billion (10.68 per cent) compared to the previous fiscal year.
“Import duty registered a surplus of (UGX 275 17 billion), as did temporary road licenses with a surplus of (UGX 12.66 billion), and export levy with a surplus of (UGX 3.75 billion). However, several tax categories incurred shortfalls: VAT on imports fell short by (UGX 161.57 billion), petroleum duty by (UGX 152.89 billion), excise duty by (UGX 55.35 billion), withholding tax by (UGX 23.79 billion), infrastructure levy by (UGX 19.10 billion), and surcharge by (UGX 14.93 billion),” URA noted.
Mr Rujoki attributed the enhanced collections to “stable and resilient economic performance, enhanced administrative measures, and the cooperation of patriotic taxpayers”.
“We would like to extend our sincere gratitude to all our clients, partners, and especially those who have been compliant taxpayers. Your contributions have been incredibly valuable, and we look forward to achieving even greater heights together this year,” Rujoki says, in the statement by URA.
Enhanced Administrative Measures
Some of the administrative measures undertaken by the Rujoki-led Ura included increasing operational hours, improving arrears management, engaging with taxpayers to encourage compliance, utilising mobile offices, increasing awareness through sensitisation efforts, using alternative dispute resolution, implementing compliance initiatives such as audits and vetting, using information to inform decision-making, conducting tax investigations, implementing a new performance management approach, and using technology in custom processes.
“These initiatives resulted in a significant growth rate of 16.40 per cent in FY 2022/23,” Rujoki said.
Some of these measures include:
- Expansion of Tax Base; In the fiscal year 2022/23, the number of taxpayers registered increased by 882,286, indicating a growth of 33.70%. By the end of the fiscal year, the total number of taxpayers on the register was 3,500,294. Among them, 194,143 were non-individuals, while 3,306,151 were individual taxpayers. The growth is attributed to the success of the Tax Registration Expansion Program (TREP), which used intensive fieldwork and data-driven registrations to achieve these results.
- Enforcement Interventions: Throughout the fiscal year 2022/23, customs enforcement operations were carried out across the country, resulting in the recovery of a total of UGX 132.77 billion through 14,187 seizures. The majority of these recoveries were attributed to various offences, including under-declaration at 42.61 per cent, misdescription/false documentation at 11.70 per cent, undervaluation at 4.54 per cent, outright smuggling at 7.11 per cent, misclassification at 1.12 per cent, concealment at 0.60 per cent, and other offences at 32.96 per cent.
- Arrears management: Recoveries during the fiscal year 2022/23 totalled UGX 1991.39 billion, with government commitments being fulfilled to the tune of UGX 713.47 billion. The total recoveries for non-government arrears were UGX 1,277.92 billion.
- Litigation & Debt Recovery: In the fiscal year of 2022/23, a total of UGX 130.50 billion was recovered, surpassing the target of UGX 80.00 billion by 163.13 per cent. Additionally, the litigation success rate for the same period was 85.33 per cent. As for litigation, a summary is provided of the judgments and rulings, settled cases, and convictions obtained during the review period.
- Tax Investigation compliance initiatives: In the fiscal year 2022/23, several measures were taken to improve compliance. These measures involved the use of intelligence, investigations, information sharing, scientific analysis, and forensic document examination. The goal is to discourage tax fraud and systematic non-compliance while also identifying revenue enhancement opportunities. As a result of these investigations, recoverable revenue totalling UGX 174.64 billion was identified.
- Implementation of EFRIS & DTS: Thanks to the implementation of the Digital Tax Solution/Stamps (DTS) and increased enforcement activities, the Uganda Revenue Authority (URA) successfully onboarded new taxpayers and improved their declarations. The DTS register currently has 894 clients, and URA is conducting more inspections to bring in more clients. This is expected to result in more Local Excise Duty (LED) registration, leading to better declarations.
Outlook for FY 2022/23 and the UGX29.2 trillion task ahead
Rujoki said that URA in 2023/24 aims to collect UGX29,218.98 billion, an increase of UGX 4,067.41 billion (16.17 per cent) compared to the previous year. He expressed optimism against anticipated growth of 5.5-6.0 per cent and the revenue growth achieved in the previous year.
“To ensure that we meet this target, we have devised a comprehensive plan that includes measures such as strengthening tax administration and compliance, engaging with stakeholders, providing extensive education, improving staff accountability through performance management, implementing digital stamps and EFRIS, enhancing the use of data analytics, artificial intelligence, and risk management to identify audit cases, and revenue leakages, using alternative dispute resolution, improving staff capacity and productivity, strengthening science investigations, and managing borders effectively. With these initiatives in place, we are confident that we can achieve our goals and contribute to the growth and development of our economy,” said Rujoki.
He also made mention of new policy measures such as TheTax Procedures Code 40 (D) that waives interests and penalties on payment of principal tax aimed at arrears recovery as well as Automatic Exchange of Information(AEO) bill -2023, which gives URA mutual administration in tax matters with other tax authorities around the word.
He also reiterated the Voluntary Disclosure initiative that allows taxpayer to disclose information (tax liabilities, misstatements or omissions in their tax declarations) to the Uganda Revenue Authority (URA) without being prompted by any action or threat of action by URA and in return be relieved of paying accumulated interest and penalties, providing a fresh start for the taxpayer, and opening room for dialogue with URA.
“We are delighted to express our enthusiasm to take on the challenge of achieving our annual revenue target this year, which will require a collaborative effort. We are implementing some promising strategies and remain dedicated to investing in top-notch systems and partnerships to ensure exceptional service delivery,” Rujoki concludes.