What you need to know:
Tax body expected to raise Shs8.5trillion to finance next financial year’s budget.
Uganda Revenue Authority (URA) has closed its half year accounts with a revenue shortfall of nearly Shs250 billion, mainly because of low consumption resulting from reduced economic activities.
To beat the shortfall, which is more than 20 times the amount of money needed to get rid of counterfeit and substandard goods in the country, and nearly five times the amount of cash required to run the ministry of trade, the tax collectors will have to raise their collections target by at least 27 per cent.
“Our target was Shs4.1trillion but we collected Shs3.8 trillion, registering a shortfall of about Shs246 billion,” URA Commissioner General Allen Catherine Kagina said last week while presenting the half year revenue performance at the authority’s headquarters.
According to Ms Kagina, the deficit in international taxes of 26 billion and the Domestic taxes shortfall of 216billion, largely defined the kind of performance registered in the last six months of the financial year 2013/2014.
Under domestic collections, Corporation tax registered a shortfall of Shs161billion, an indication that the population consumption has declined.
Increased capital investments in key sectors such manufacturing -recent commissioning of Beer and Steel industries valued at more than $17 million, meant that these industries couldn’t remit corporation tax because they were not making profit.
URA records also shows that many companies that were previously posting profits declared smaller profits or losses citing a slowdown in the economy and low access to affordable credit.
About 325 companies that posted profits in Financial Year (FY) 2011/12 registered losses in FY 2012/13 which had an impact on corporation tax performance over the first half of FY2013/14.
Additionally, the banking sector posted a deficit due to reduction in less demand for new loans and higher default rates on existing ones. The industry has also shifted to investing in treasury bills due to the lower risk at this time.
Deficit in other tax heads such VAT (Shs118 billion shortfall), withholding Tax (Shs30 billion shortfall), and the delay of the Integrated Financial Management System maintenance work delayed payments to government suppliers, resulting into a decline of 25 per cent government withholding tax remittances to URA among other reasons.
International trade taxes’ performance of 98.50% was attributed to
Import duty (Shs44 bilion surplus)
Dutiable imports as percentage of total imports registered an increase to an average of 28 per cent in the first half of FY 2013/14 up from 23 per cent in FY 2012/13. The major dutiable imports that registered growth include Iron steel structures, Rice and worn clothing.
VAT on imports (Shs23 billion, surplus), Petroleum Duty (Shs 6billion surplus)
Petrol grew at 11.44 per cent (29 million litres) and diesel at 5.35 per cent (17.27million litres).
Withholding tax on imports (Shs53 billion Deficit)
171 new exempted companies in the first half of FY2013/14 imported goods amounting to Shs301 billion resulting in estimated revenue loss of Shs18 billion.
Excise duty on imports (Shs47 billion deficit)
Delays in approving the policy change that revised Excise duty on spirits from 140 per cent to 100 per cent led to a 36.84 per cent reduction in excise duty collections from undenatured spirits compared to the same period FY 2012/13.