How Akena collects cash from a taxing school

Dr Godfrey Akena teaching students at the East African School of Taxation. PHOTO BY RACHEL MABALA

What you need to know:

The five year-old institution established with a Shs30 million loan now earns Akena close to Shs60 million every three months.

Mr Godfrey Akena’s motivation is drawn from the desire to change the fortune of people in private practice without necessarily making a kill in profits.

For that, the founder the of East African School of Taxation (EAST), regards himself as a social entrepreneur rather than a businessman who is entirely driven by profit motives.

When Mr Akena, a lawyer by profession, founded the East African School of Taxation (EAST) in 2009, his motivation was to arrest a problem he thought is evident—poor tax compliance and assessment.

“I was a lecturer at Uganda Revenue Authority (URA) tax school and lawyers in private practice also wanted to be part of the class but they couldn’t because it was restricted to the tax body staff only.”

The gap
He continued: “Yet people outside URA equally needed to know how they can comply with the tax obligations and understand how tax assessment is derived. So after persistent demand for such services by mostly lawyers, I set out to establish the tax school.”

“I didn’t have money to start the tax school and yet the demand for it seemed overwhelming. So, I borrowed Shs30 million from those (mostly lawyers) who wanted the programme and established the school.”

HOW AKENA EARNS FROM TAX SCHOOL

After two semesters which were held at Grand Imperial hotel in Kampala, Mr Akena was able to pay back the Shs30 million which he used in paying for the space he rented from the hotel.

After every three months, Mr Akena earns not less than Shs60 million from the tax school, the first of its kind in Uganda and probably the East African region as well.

He regards tax as a social investment, arguing that although he is making money out of it, the ultimate intention is to encourage and improve tax compliance in the private sector.

Number of students
When he started, he had 70 students whose number has since increased to 80, that is those who eventually graduate. However, at the beginning of each programme more than 100 students enrol but due to the demand of the curriculum, nearly three quarters drop out along the way.

He employs 12 people and as the institution expands so will the number of employees.

Eligibility
The tax school is a research and training centre for taxation in the region. It offers courses and continuing education programmes in taxation, public procurement and public financial management.

“We offer post graduate practical tax (related) courses and award a diploma for it upon completion. Since 2009, about 362 have since graduated and another 100 are awaiting graduation,” Mr Akena said in an interview last week.

He continued: “I believe our fees of Shs850,000 per semester is modest enough. Because if our intention was making a kill in profit, we could have charged more and still have the same number of students we have now. In a way, this is corporate social responsibility.”

Clientele

Most students are advocates from different law firms, certified public accountants and members of Association of Chartered Certified Accountants (ACCA). Students from across the region including Somalia and Liberia are also part of those digging for practical tax at the school of taxation.

Achievements

East African School of Taxation is one of the consulting wings of Liberia Revenue Authority. It also does training for Liberia tax body, an arrangement that is being facilitated by the African Development Bank. The semi-independent state of Somalia has tapped into the legal expertise of the school to create what Mr Akena described as ‘legal framework’ for Somaliland Revenue Authority.
Accrediting the tax school last year in December by the Uganda National Council for Higher Education in accordance with Section 112 of the Universities and other tertiary Institutions Act 2001, remains one of the memorable days in the short history of the only tax school in Uganda.
The accreditation means that the East African School of Taxation courses such as Diploma in Tax and Revenue Administration are recognised both nationally and globally.
Since its inception, the tax school has held three graduation ceremonies for the students who successfully completed the course. (The graduations were held in January 2011, May 2012 and March 2014.) The number of graduates has also steadily grown from 100 students at the first graduation to more than 200 students during the last graduation.

Challenges being encountered
According to Mr Akena, experience has since taught him that not everybody is comfortable when it comes to crunching numbers, including elites in different professions—mainly those in social sciences brackets.

“The rate at which most students drop out after starting sessions where crunching numbers cannot be avoided is saddening.

Those who graduate are either those who have science backgrounds or accountants; meaning not many people are comfortable with numbers.”

He continued: “And we cannot avoid numbers in taxation and business. I think if we get used to numbers then the completion rate could be a little higher.

We enroll about 1,000 but only 362 finish the course as many drop out because of calculations.”

Delays in fees payment is also another challenge that the tax school is grappling with. Many students tend to pay towards the end of the semester as opposed to the beginning.

This means that management must find alternatives to pay teaching and non-teaching staff who may not be patient enough to wait to be cleared after three months when the semester ends.

The future
Mr Akena is looking at multiplying the number of the students who graduate. He says he is looking at 200 in number which will translate into earnings of nearly Shs200 milllion per semester, an amount of money that will be just enough to propel the tax school to another level.

He plans to do this through increasing his appeal both within and beyond the borders by partnering with several universities to offer the tax courses. Such an arrangement is already underway with Mukono and Nkumba universities.

Moves to also offer degree courses in taxation and other related matters including Masters of Law in (international) taxation are also in the pipeline.

But at the moment, the tax school’s energies are focused on securing partnership with the Tax University based in Vienna.
The partnership, if well executed, could see the classes relocated from Conrad Plaza to a permanent home expected to cost about $2million (about Shs5.2 billion).

His tips on why businesses should be tax compliant
My particular advice to entrepreneurs and the business community in general is that compliance is much cheaper than evasion.

And for an entrepreneur to understand that he/she must have some knowledge on how to do basic tax assessment, something the tax school is offering.
The penalty for non-compliance is stiff. If you want to understand that, then wait till you get caught by the tax collector.

With the kind of system URA is establishing, it is going to be hard to evade taxes so you are better off complying than evading because once you are caught, your punishment will be doubled—first for not complying and second for being caught.

Businesses are less inclined to pay taxes when they are inadequately supplied with public goods such as electricity and transport infrastructure. In this case, business people do not see value for their money and withhold the tax cheque.

Intuitively, when electricity is not available, a business may invest in a generator which inevitably increases the cost of doing business.

Likewise, a business that faces a bad road may have to replace vehicle parts more frequently which also increases the cost of doing business. Faced with increasing costs, firms may under declare their actual performance, so as to avoid taxes and maintain a given level of profitability.