URA ends year with 14% tax-to-GDP ratio

Over the last 12 months, Uganda Revenue Authority (URA), the country’s tax prefect, made more gains than losses.
The gains registered have been accrued mainly from the tax body’s core mandate. The Authority closed its first quarter in September with a net revenue collection of Shs3.7 trillion - an eqiuvalent of 103.5 per cent, thanks to the Shs127 billion surplus collected in the first quarter.

The surplus came from the back of nearly half a trillion shilling shortage recorded in the previous financial year. Compared to the same period last financial year, the growth rate of 17.8 per cent registered in the first quarter is a tell-tale sign of where the Commissioner General, Ms Doris Akol has set her sight.

Over the last four years, revenue performance has been picking up. To date, total gross revenue collection has exceeded Shs48.7 trillion - an average of over Shs12 trillion per annum or Shs1 trillion per month.

Close to half of the economy – 49 per cent – is in the informal sector, and does not directly contribute to the tax kitty. This constrains the tax base promptinggovernment to introduce a raft of taxes in the Excise Duty Act (Amended), notably on Over the Top (OTT) services and mobile money transactions.

Beginning July 1, 2018, users started paying a tax of Shs200 ($ 0.05) daily to access various social media platforms including Facebook, WhatsApp, Twitter and LinkedIn.
The 1 per cent mobile money tax, was reviewed downwards to 0.5 per cent after public brouhaha. The levy is now only applied on withdrawals.

But government still justifies this policy regarded by a substantial section of the population as “regressive.”

Contribution to National Budget
“Despite the impressive performance registered lately, the revenue generation initiatives are a culmination of what has been happening over the last four financial years under the watch of Ms Akol.

So far, initiatives put in place have contributed over Shs48 trillion to finance the National Development Programmes.
“There has been visible growth in the revenue from a mere Shs9.7 trillion in FY 2014/15 to Shs14.5 trillion in FY 2017/18, indicating an absolute growth of Shs4.8 trillion,” reads a statement documenting part of the achievement registered over the last four years under the watch of Ms Akol.

The statement further reads: “Likewise, the tax to GDP improved from 12 per cent to 14 per cent by the end of FY 2017/18. Additionally, the tax to national budget ratio improved from 69 per cent to 74 per cent in FY 2016/17 and 71.5 per cent in 2017/18.”

At the beginning of the FY 2014/15, the total number of registered taxpayers was 632,379. The end of FY 2017/18 saw an increase in this number to 1.3 million taxpayers. In that period, 688,312 additional taxpayers were brought on board, representing a growth in the register of 108.8 per cent.

This performance was boosted by various initiatives over time including the Tax Registration Expansion Programme (TREP), robust tax education and sensitisation campaigns, and block management system which focus on physical identification and mapping of taxpayers.

The last 12 months also saw operationalisation of some Four out of the six One Stop Border Posts (OSBPs) in Uganda started operating. These are Malaba, Busia, Mirama Hills and Mutukula. This has translated into reduced turn-around time from three days in FY 2015/16 to two hours in FY 2017/18.

As of this month, the Regional Electronic Cargo Tracking System (RECTS) a web-based integrated system for monitoring transit cargo, launched in February 2017 to deal with cases of dumping, delayed bond cancellation and refund processing, has improved truck turnaround time from 4 to 8 trips a month.

At the same time, the Authorised Economic Operator (AEO) programme played its part. AEO’s are compliant taxpayers who are rewarded with priority treatment at all times with pre-arrival cargo clearance, self-management of bonded warehouses, choice of place of physical examination of cargo, automatic renewal of Agency licences for being compliant tax payers.

By the end of FY2017/18, 36 AEO companies had been licensed and the cost of doing business subsequently reduced.

The Single Customs Territory (SCT), not only facilitated trade but also boosted revenue collection. This initiative has reduced clearance time of cargo from Mombasa, from 18 to 22 days in FY 2012/13 to 4-6 days in 2017/18. Fuel imports clearance time reduced from three to six days in FY 2012/13 to eight to 14 hours in 2017/18.
The turnaround trips of transporters increased from three rounds in FY 2013/14 to eight rounds in 2018. The amount of collections through SCT grew from Shs2.1 trillion in FY 2015/16 to Shs2.7 trillion in the FY 2017/18.

THE FUTURE
Outlook. “Our outlook into the future will focus on exhibiting more resilience and commitment to increasing our domestic revenues. We shall ensure that a taxpaying culture is further cultivated amongst all citizens; strategic partners are engaged for support, advisory and for exchange of information,” Ms Akol said in a statement highlighting her four year achievements.
She further said the Authority will seek to simplify business processes, provide client centric solutions delivered by quality human resources both in terms of professional competence and attitude of service.