Govt picks more than 70 percent of taxes from 1,000 payers

URA has in the four years to June 2023 expanded the tax register by 66.5 percent but it remains largely dependent on just a few large taxpayers. Photo / File 

What you need to know:

  • The tax register has about 3.5 million taxpayers, but majority contribute an average of just 25.5 percent of total tax revenue

At least 74.5 percent of Uganda’s taxes, which is more than three quarters, are collected from just 1,000 taxpayers, according to data from Uganda Revenue Authority (URA). 

The 1,000 are classified as top taxpayers. However, URA does not provide details of which sectors they fall in, but details indicate that manufacturing, wholesale and retail trade, which also includes repair of motor vehicles and motorcycles and financial and insurance activities, generated the largest share of tax revenue, contributing 3.2 percent, 3.7 percent and 1.4 percent, respectively.

Data contained in the Annual Data Book 2022/23 indicates that URA collected Shs19.2 trillion from just 1,000 taxpayers, out of the total Shs25.2 trillion mobilised in the period. 

This, data shows, was an increase from the Shs15.97 trillion or 72.3 percent mobilised in the year ended June 2022. 

Details further indicate that collections from the top 1,000 have been dominating tax revenues over the years, contributing at least 75.8 percent and 76.8 percent of total revenues, during the two financial years ended June 2020 and June 2021, respectively.  

Uganda currently has a register of 3.5 million taxpayers, which has more than doubled in the last four financial years from just 1.6 million taxpayers in the year ended June 2020. 

URA data indicates that the register grew to 1.8 million in the year ended 2021 from 1.6 million, before expanding to more than 2.6 million in the financial year ended June 2022. 

However, despite the growth, majority of Ugandans remain outside the taxable fold with a number of businesses and individuals, especially in agriculture and small enterprises not contributing to the national treasury. 

URA has been working on different measures, such as digital tax solutions to bring more taxpayers into the tax fold.

The measures seem to be paying off given that the tax register has in the four financial years to June 2023 grew by 45.5 percent even as majority of taxpayers still contribute just a small share to the national treasury. 

During the year ended June 2023, URA data indicates that taxpayers outside the top 1,000 contributed just 25.5 percent, which is just a quarter of the total tax revenue, which returned a combined collection of Shs6.6 trillion. 

This was far lower than the Shs19.2 trillion mobilised from the top 1,000 taxpayers. 

Contributions from taxpayers outside the top 1,000 have persistently been low, standing at an average of 25.1 percent in the four financial years to June 2023, according to URA data. 

URA also indicates that net revenue collections have been improving over the years, growing from Shs16.6 trillion in the period ended June 2020 to Shs25.2 trillion, representing a 66.5 percent growth in the four financial years to June 2023. 

The growth in tax revenue and the register has been instrumental in supporting the expansion of the tax to gross domestic product ratio, which in the four years to June 2023 has expanded by 1.64 percent from 11.99 percent in June 2020 to 13.63 percent.