What you need to know:
- The Chairman of the Private Sector Foundation Uganda, Mr Patrick Bitature and the Chairperson of Uganda Manufacturers Association, Ms Barbara Mulwana applauded the move by URA to apply science in tax administration saying it will result to fairness and levelled playing field for all.
Government must motivate Uganda Revenue Authority (URA) better or else they will continue to be eluded by sophisticated criminals who according to the Deputy Speaker of Parliament, Jacob Oulanyah, are already 15 steps ahead of the game.
According to Mr Oulanyah, the motivation that drives a section of tax payers such as the multinationals and big corporations to either evade taxes or resort to manipulative practices to reduce their rightful tax liabilities through aggressive and harmful tax planning, cannot in most cases match what the government provides, leaving its employees either clueless or simply sniffing at the trail instead of being ahead of it.
Multinational firms and huge corporations contribute nearly 40 per cent of Uganda’s tax revenue, with the 2016/17 financial collections standing at Shs5.7 trillion. But, URA is not content with the contribution, disclosing that there are increasing incidences of special purpose vehicles being set up by many of such multinational enterprises resulting to both outright tax evasion and revenue avoidance.
While opening the 1st Science Model Workshop hosted by URA and sponsored by the African Tax Administration Forum (ATAF), Mr Oulanyah said: “Criminals are now leading the way. They employ tax planners who are always ahead of the game. For them instead of paying $5billion in taxes they invest $1million to pay much less in revenue than they are supposed to.”
He continued: “This is why we should have a well-resourced and facilitated team that is able to respond in equal measure or at least the gap should not be that wide. So the ministry of finance should think about facilitating URA better. They should bring to Parliament policies that will help motivate and facilitates URA do a good work as this can help the country get what it deserves.”
How revenue is lost
It emerged in the five-day Science Model Workshop that has attracted nearly 40 delegates from 18 countries in Africa that the revenue is mostly lost through Illicit financial flows (IFF) which is normally done through tax evasion, money laundering and false declaration. This is mainly perpetuated by the multinational companies. Other illegal methods used include overpricing, transfer pricing, corruption and false declarations, all denying the country and the continent its due share of revenue.
A report on IFFs estimates that Uganda loses at least Shs2 trillion every year to illegal activities perpetrated by multinational companies. The money lost is nearly an equivalent of three times the budget allocated to agriculture sector.
In the same report, the African Union/Economic Commission for Africa High Level Panel on Illicit Financial Flows from Africa report, chaired by former South African president Thabo Mbeki, shows that the multinational companies in Africa deny the continent its due share of revenue through tax evasion, money laundering and false declaration.
URA weighs in
According to the Acting Commissioner General, Patrick Mukiibi, application of science in enhancing tax compliance and eliminating the aforementioned tax criminality is the way to go. He disclosed that already URA has been taking that route with over Shs100billion so far recovered from a few cases that were investigated in just one department of the tax body.
“We do analytical science to determine compositions of products so that we can come up with the right tax assessment. We also do forensic audit where we interrogate financial statements further than what is contained there. So over the last 8 or so years we have been applying science in our tax administration,” he said.
Mr Mukiibi continued: “But of course in all these, motivation is key. Already those involved in this kind of scientific audits are motivated a little bit more. The challenge is to keep them motivated because that is important.”
He was also of the view that the five-day workshop being held in Munyonyo, Kampala was to address such and related challenges including allowing of sharing information among ATAF member countries with the view to enhance compliance.
Private sector have their say
The Chairman of the Private Sector Foundation Uganda, Mr Patrick Bitature and the Chairperson of Uganda Manufacturers Association, Ms Barbara Mulwana applauded the move by URA to apply science in tax administration saying it will result to fairness and levelled playing field for all.