Prime
Why Rujoki got second term at URA despite mixed fortunes
URA commsioner general, John Musinguzi Rujoki
What you need to know:
- Mr Musinguzi, who had previously headed the Finance and Audit Department in the Special Revenue Protection Services, has been at the helm of the tax body for three years and 11 months.
President Museveni has renewed the contract of Mr John Musinguzi Rujoki as Commissioner General (CG) of the Uganda Revenue Authority (URA).
Mr Musinguzi, who had previously headed the Finance and Audit Department in the Special Revenue Protection Services, has been at the helm of the tax body for three years and 11 months. He was appointed on March 29, 2020, replacing Ms Doris Akol, who had worked as CG for five years and five months.
Ms Akol didn’t get a contract extension despite overseeing improved collections by the taxman. The collections totalled just under Shs12 trillion during the Financial Year (FY) 2015/2016. This improved to Shs12.7 trillion in FY2016/2017; Shs14.45 trillion in FY2017/2018; and Shs16.6 trillion in FY2018/2019.
False start
Mr Rujoki’s appointment came at a time when the taxman was grappling with revenue collection shortfalls and failed collection targets. Half-year revenue performance figures for FY2019/2020 revealed a shortfall of nearly Shs700b against a target of Shs9.7 trillion.
The pandemic containment measures that Uganda brought in during the third week of March 2020—just days before Mr Rujoki assumed office—meant that the new CG had his work cut out from the get-go. The tax body eventually ended up collecting Shs16.75 trillion against a target of Shs20.33 trillion. There was also a slump of Shs2 trillion in tax revenue growth.
Mr Rujoki’s first term in office has also been a time of immense volatility in the markets caused by geopolitical factors. These include the outbreak of the Russia-Ukraine war, continued lockdown restrictions in parts of China, the emergence of Covid-19 variants and imported inflation.
Man on a mission
So how has Mr Rujoki fared in the face of the aforesaid odds? In his first address to URA staff, Mr Rujoki said: “My focus in URA will be to tackle corruption, tax education, enhance the human resource function, improve stakeholder relationships, and leverage on technology and research to improve the integrity and revenue collections and growth of URA.”
During his first two post-pandemic years in charge, FY2020/2021 and FY2021/2022, URA did not meet targets set by the Ministry of Finance and Economic Planning. Revenue collections, however, grew quite significantly.
Figures from the Finance ministry indicate that URA collected Shs19.26 trillion in FY2020/2021. It rose to Shs21.65 trillion during FY2021/2022 and Shs25.2 trillion in FY 2022/2023. FY2023/2024 also saw the tax body beat the target of Shs25.1 trillion that had been set by the Finance ministry.
The tax-to-GDP ratio has been consistently ranging between 10 and 14 percent, with the highest tax-to-GDP of 14 percent, the highest in 33 years, being achieved in FY2022/2023. The sub-Saharan average is 18 percent.
Leveraging technology
Over the past few years, URA has embraced the use of technology in order to shore up the numbers. The Digital Tracking Solution (DTS), which entails placement of unique security featured labels that can be tracked and traced on the distribution chain, has increased the collection of Excise Duty from 13 consumer goods. These include beers, sodas, juice, wines, whiskeys, water, sugar, cement, tobacco cooking oil, and cigarettes. Consequently, URA collected Shs919.61b in local Excise Duty for the period July to December 2022.
The introduction in 2021 of the instant Tax Identification Numbers issuance for individual taxpayers has meant the number of people on the tax register increased from two million to 3.5 million.
More than 40 Non-Intrusive Inspection (NII) scanners have, for example, been installed at Entebbe airport and major border crossings, which has helped in intercepting contraband goods and combat smuggling.
The Bonded Warehouse Information Management System (BWIMS) was launched in November 2022 to help manage cargo under customs control, as is the Air Cargo Control Unit (ACCU) that was introduced at Entebbe airport in June 2022 to help track illicit goods.
Stakeholder engagements
Engagements with other tax bodies and associations have increased over the last few years. The idea was to drive up tax compliance and increase revenue mobilisation. In 2021 and 2022, for example, 38 new operators for the Authorised Economic Operators (AEOs) programme were accredited. The idea was to enhance facilitation and security of international trade, which would drive up voluntary compliance with customs laws.
In the same period, URA signed a Mutual Recognition Agreement (MRA) with China and entered into a Memorandum of Understanding (MoU) with South Africa’s Revenue Services. The idea was to facilitate ease of export and import trade and access to markets in the two countries.
URA also retained its membership on the Council on African Tax Administration Forum (ATAF), a body which promotes cooperation among African tax administrators for purposes of increasing revenue mobilisation. It also joined the Organisation for Economic Co-operation and Development (OECD) under the Exchange of Information programme.
“This is a tax compliance tool that supports audits and investigations on cross-border transactions, especially for multinationals and high-net-worth individuals. This is a tool that URA has actively implemented with growth in the number of requests from two in 2012 to more than 170 between 2014 and 2022 with tax recovery of Shs259,935,498,396 in the same period,” Mr Ibrahim Bbosa, URA’s assistant commissioner of public and corporate affairs, said.
Cooperation agreements with service providers like the National Identification and Registration Authority (NIRA) and Uganda Registration Services Bureau has also led to expansion of the tax register.
“These have been instrumental in the improvement of rental tax collections, which have been progressive from Shs12.44b in December 2021 to Shs17.06b in December 2022,” Mr Bbosa added.
Combating graft
Mr Musinguzi took over at URA at a time the institution’s reputation was heavily tainted with accusations of high-level corruption. In one of the most highly publicised frauds, staff were discovered to have created ghost informers under the informer management and reward policy, which culminated into the loss of billions of shillings in fraudulent payments to the ghost informers.
In other cases, staff were found to be colluding with taxpayers, which often led to loss of revenue.
“Sixty-seven staff have been dismissed on grounds of corruption, including three who have been prosecuted and convicted,” Mr Bbosa said.
In 2021, URA adopted the Comprehensive Integrity Strategy (CIS) to fight corruption internally and improve service delivery and revenue collections. This led to the incorporation of policies, including a code of conduct, a lifestyle audit and others on the prevention of abuse of office and sexual harassment.
Dispute resolution
The introduction of the Alternative Dispute Resolution (ADR), through which the URA and taxpayers meet and resolve any disputes outside the court system, has been running for the last two years. It has helped improve relations between the tax body and taxpayers and improved tax compliance.
“Some of the benefits realised from the implementation of ADR include expedited resolution of tax disputes and decreased cost of tax dispute resolution associated with litigation,” Mr Musinguzi says.
Following URA’s entry into an MoU with His Majesty Revenue and Customs, the UK revenue administration, in 2020, URA introduced the voluntary disclosure programme through which taxpayers willingly declare their business information and commit to comply with the taxes. The benefits include avoidance of paying accumulated interest and penalties. Forty seven taxpayers have so far joined the programme.
“We want to see a change in the tax paying culture of Ugandans, as well as improve the collecting efforts of the taxman with the activation of the voluntary disclosure programme,’’ Mr Musinguzi adds.
Tax education
URA has also been vigorous in the areas of tax education aimed at providing the masses with information about the tax obligations so that they voluntarily comply with tax laws.
The education was informed partly as a result of some not so pleasant developments. On January 3, for example, one Moses Atidra succumbed to injuries suffered when URA enforcement officers shot him during an operation to impound numberless motorcycles in Okollo Town Council in Madi Okollo District.
On November 14, 2023, a woman was shot dead and two others left nursing injuries as URA enforcement personnel chased after an errant motorcycle in Arua City.
In February 2023, three people, including one Badru Adui, a boda boda cyclist in Koboko, sustained serious injuries after boda boda cyclists protested URA operations over smuggled fuel.
Abel Kagumire, the commissioner of Customs, was in the wake of those developments quoted by sections of the media as saying the tax body had adopted a new strategy that involves tax education and engaging the taxpayers first before carrying out enforcement.
Tax education has so far been mostly driven by the Tujenge Uganda Buses, a mobile service office, to take tax information to areas that URA cannot reach.
Other tools such as tax clinics, televised tax barazas, radio and television talk shows, door-to-door awareness programmes have also been part of the mix.
As he begins the new term, Mr Musinguzi is still aiming to increase tax education and sensitisation, continued roll-out of technology and use of data in revenue collection, stakeholder engagements, and staff skilling and integrity enhancement as tools that will drive voluntary taxpayer compliance.
The plan is to grow Uganda’s tax-to-GDP ratio from 13 percent to at least 18 percent by the end of FY2024/2025.
