IMF asks govt to prioritise digitisation of tax register
Government has been digitisation several tax heads, especially among excise duty-rated goods. Photo / File
What you need to know:
- The IMF says digitisation of the tax system will support revenue administration, while at the same time transform URA
The International Monetary Fund (IMF) has asked government to prioritise funding of basic infrastructure to achieve a digitally efficient tax system.
This, the IMF said, will support revenue administration, while at the same time transform URA to support good international practices across the compliance continuum as well as promote voluntary compliance.
In details contained in the Uganda fifth review, the IMF noted that achieving targeted revenue will require government to focus on taxpayer perceptions and confidence in the revenue system by prioritising funding for basic infrastructure, enhancing digitisation and IT strategy, and, particularly, fast-tracking the implementation of a new e-tax system”.
In a response in a letter of intent signed by Finance Minister Matia Kasaija and Bank of Uganda deputy governor Michael Atingi-Ego, government said it would, during the 2024/25 financial year, prioritise implementation of the e-tax system to improve tax administration.
“We will step up implementation of the new e-tax system,” the letter said, without giving further details.
However, while speaking in a televised interview, Finance Ministry Permanent Secretary Ramathan Ggoobi, said government was going to digitise the entire tax system to eliminate evasion and avoidance.
“Everybody pays their due tax and as a result we shall make Ugandans pay less tax per head but at the end of the day we collect more revenue than now having fewer Ugandans paying and others don’t pay,” he said.
Government has since 2019 implemented several digital tax measures, among which include digital tax stamps, implemented by SICPA, electronic fiscal receipting and invoicing solution and rental income tax.
The measures have supported URA to realise targeted revenues and improved compliance levels.
During the period ended June 2023, a Ministry of Finance report indicated that government had recorded an improvement in tax performance among digital tax stamps-rated goods as well as an improvement in production volumes and sales.
Details contained in the Background to the Budget report noted that digital tax stamps had seen an increase in both production and sales with some goods registering increments of more than 80 percent in the year ended 2023.
URA has previously indicated that increase in declarations among digital tax stamps-rated goods had boosted tax collection, rising by 30 percent by June 2023 from Shs740.79b to Shs963.38b.
The digital tax stamps register also increased during the period, rising from 40 to 1,201 digital tax registered taxpayers, of which 886 were manufacturers, while 315 were importers.
URA also indicated that digital tax stamps had led to an expansion of the local excise duty register, which during the period, grew from 127 to 662 taxpayers.
