Use technology to increase tax to GDP to 20%, Kasaija tells URA 

Finance Minister Matia Kasaija

What you need to know:

  • Finance Minister Matia Kasaija says there is no reason why a mature country like Uganda should go through the humiliation of borrowing

Finance Minister Matia Kasaija has said Uganda Revenue Authority (URA) should use the newly launched digital strategy to secure a 20 percent tax to gross domestic product (GDP) ratio in the next two years. 

Speaking at the launch of the strategy in Nakawa, Kampala Friday, Mr Kasaija said there is no reason why a mature country like Uganda should go through the humiliation of borrowing, yet it has enough resources to fund its development. 

“I am tasking URA to secure a 20 percent tax to GDP ratio within another two years. There is no way a mature country such as Uganda should have to go through the humiliation of borrowing. As [Ministry of Finance], we additionally urge URA to facilitate government’s job creation efforts for our youth,” he said. 

Uganda's tax to GDP rations currently stands slightly above 12 percent.  

Through the new digital strategy – codenamed the 2024-27 Digitisation and IT Roadmap - URA will seek to deliver near-instant tax services, inclusive solutions for all tax segments and solid technologies, within the reach for taxpayers. 

Mr Robert Mutebi, the URA commissioner IT and innovation, said the new digital strategy had been built on the backdrop of innovation with the view of simplifying “our customer journey and to reach as many people as possible with tax services”. 

“We seek to provide clarity and certainty for taxpayers whenever they need information from URA. We [are also seeking] to use technology more to identify and address tax non-compliance in real time,” he said. 

The strategy will also be key in facilitating URA’s agenda to automate tax processes, quality assurance and mitigating revenue leakages. 

URA has in the past five years integrated ICT in tax administration, and has been well ahead of government's digital agenda, which was only launched recently. 

During the period, URA has implemented a number of digital solutions under the Domestic Revenue Mobilisation Strategy as way of widening the tax base and recruit more taxpayers into the taxable fold. 

Such innovations, include digital tax stamps (DTS), implemented by SICPA, Electronic Fiscal Receipting and Invoicing System (EFRIS) and digitizing rental income tax, among others, remain central to closing tax leakages and improving compliance. 

In 2019, URA implemented DTS, thus improving excisable tax collections, which during the 2022/23 financial year grew by Shs157.9b, representing an increase of 24.2 percent. 

The growth underscores effectiveness of digital solutions in efforts to improve tax administration and domestic revenue mobilisation.

A World Health Organisation report on tax administration, indicate that digital tax stamps have been key in addressing revenue leakages as well as enabling traceability of the origin of goods.  

"Digital tax stamps serve as a formidable tool in countering tax evasion. They encapsulate key details such as brand specifics, manufacturer's information, production location, and chronological data of the stamp, enabling comprehensive product traceability," the report notes.

The strategic initiative has spurred a significant increase in DTS adoption — rising from 200 companies in 2020 to 1,171 companies currently using the solution.