Tax collection efforts: URA boss lauds local media, taxpayers
The Uganda Revenue Authority (URA) has commended the local media channels and taxpayers for their continued support in tax collection.
“I would like to thank the media for the continued support in the noble journey of mobilizing revenue for national development,”URA’s Commissioner General John R. Musinguzi said days ago while releasing revenue collection statistics for the period July 2020 to June 2021.
The revenue report focused on the revenue performance for the financial year (FY) 2020/21, the factors behind the performance and the outlook for the FY 2021/22, the year when the country will be celebrating 30 years of existence of URA.
In the FY 2020/21, URA collected net revenue of UGX 19,263.00 billion and posted a growth in revenue of 14.99% in comparison to the FY 2019/20 and an estimated tax to GDP ratio of 12.99 percent. “In real terms, this reflects a growth in revenue of UGX 2,511.36 billion and a growth in the Tax to GDP ratio by 1%. This the highest growth registered in the last four years.”
However, URA indicates that the outturn of the FY 2020/21 was short of the target of UGX 21,638.65 billion by UGX 2,375.65 billion. “It is important to note 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 performance
The domestic revenue collections in the FY 2020/21 were UGX 12,144.01 billion, registering a growth of 13.71% (UGX 1,464.19 billion in real terms) in comparison to the FY 2019/20. However, the collections were below the target of UGX 14,038.18 billion by UGX 1,894.18 billion.
Sectoral contribution to revenue In FY 2020/21
71% of the revenue was generated from the top 4 sectors. The wholesale and retail trade sector had the biggest contribution, which amounted to UGX 5,783.69 billion (29.43%). The manufacturing sector followed with a contribution of UGX 4,461.29 billion (22.70%). The Information and communication sector contributed UGX 2,059.83 billion (10.48%), while UGX 1,643.54 billion (8.39%) was generated from the financial and insurance services sector.
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 financial year 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.
Reasons for Revenue Performance in the FY 2020/21
Debt recovery of UGX 1,024.38 billion mainly attributed to Alternative dispute resolution (ADR) which contributed over UGX 365 billion, the voluntary disclosure initiative, close monitoring of Memorandum of KRA OBR RRA TRA URA Growth in Net Revenue Collections FY 2020/21 3.90% 11.72% 9.00% -0.10% 14.99% -2.00% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% % growth in FY20/21 against FY 19/20 6 Understanding (MOUs) for installment payment, and enforcement mechanisms among others.
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 (IVR4) (Toll free lines 0800-117000 / 0800- 217000), faster clearance of refunds5, 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 billion 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.
The shortfall in revenue was mainly attributed to 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 the 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. 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 Standard Operating Procedure.