Anne Kiconco
In January 2021, the Uganda Revenue Authority (URA) launched the Electronic Fiscal Receipting and Invoicing Solution (EFRIS) under its Domestic Revenue Mobilisation Program. Initially mandatory for VAT-registered businesses, the focus has now shifted to integrating informal sector traders, particularly in downtown Kampala.
This initiative aims to enhance tax compliance and formalize Uganda’s largely informal economy. While it addresses tax management challenges and expands the tax base, Efris is expected to significantly impact both informal traders and the broader economy.
The implementation of Efris is a key step in integrating informal traders into Uganda’s formal economy. It increases tax revenue for the government while helping traders comply with tax regulations. By systematically recording business activities, EFRIS expands the tax base and ensures a fairer distribution of tax responsibilities.
Although cash-based transactions and poor bookkeeping have hindered record-keeping in the informal sector, Efris addresses these issues with real-time transaction tracking, electronic receipts, and invoices. This improves bookkeeping, simplifies financial management, and creates formal transaction records, enabling businesses to secure loans, foster growth, and enhance market competitiveness.
Some traders may resist adopting EFRIS due to fears of higher tax obligations or increased scrutiny from URA. However, this perception needs to shift, as EFRIS offers numerous benefits. It saves time, allowing businesses to focus on growth, and simplifies VAT refund processes by giving the URA instant access to relevant information.
Unlike traditional methods requiring manual compilation of invoices and documents, Efris automates tax compliance. Efris creates opportunities for informal businesses to participate in government procurements and economic programs. By formalizing through Efris, businesses can access initiatives like the "Buy Uganda Build Uganda" (BUBU) policy, which supports locally produced goods and services, offering broader market access and government backing.
Additionally, the National Oil & Gas Local Content program reserves 70 percent of opportunities in Uganda's oil and gas sector for compliant local businesses. Efris enhances accountability and compliance, enabling these businesses to become credible and competitive participants in such lucrative markets.
The URA has made Efris accessible through various platforms to accommodate businesses of all sizes. Traders can issue electronic receipts and invoices via SMS, the URA’s web portal, system-to-system (S2S) integration, or electronic fiscal devices (EFDs).
These flexible options ensure that even small-scale traders can comply with the system without incurring significant costs. Ultimately Efris is designed to support both the formal and informal sectors and is likely to transform the economy, potentially improving Uganda’s GDP growth from 6.0 per cent in the fiscal year 2023/24 to a projected 7.0 per cent in 2024/25 as per the International Monetary Fund (IMF) country report of March 2024.
Adopting Efris not only simplifies business operations but also provides traders with numerous benefits, as outlined above. Formalising Uganda's economy is crucial for long-term economic growth as the country continues to expand. By using Efris, traders can set themselves up for sustainable success, contributing to a more organized, transparent and robust tax economy in Uganda.
Ms Anne Kiconco
Tax Associate, Ernst & Young
