Writer: Hamza M Ssali. PHOTO/FILE/COURTESY
To streamline tax administration and enhance revenue collection, the government has proposed an important measure in its 2025/2026 tax proposals: The use of the National Identification Number (NIN) as the Tax Identification Number (TIN). This move aims to bring more taxpayers into the tax net, increase revenue collection and the overall revenue to GDP ratio, which has in fact for the past decade or so hovered around 12 percent-13 percent.
However, this proposal is not without its challenges, particularly concerning data protection and the potential for flooding the tax register with inactive taxpayers as well as burdening taxpayers with overwhelming tax requirements. I recently had a conversation with a friend who is involved in coffee farming. He has never considered taxes as part of his life and remains indifferent to the concerns of other taxpayers.
This includes traders who have frequently staged strikes and routinely engage in various discussions, not only with the tax administrator, the Uganda Revenue Authority (URA) but also with the fountain of honour, Mr President! During our discussion, he first brushed off the direct impact this new amendment would have on his farming business.
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‘A man deep in the village, over 140 kilometres from Kampala, how can I even lose sleep over tax matters, which don’t concern me? These are issues of corporate companies and traders.’ He is, however, aware of the indirect taxes he normally suffers on sugar, soap, fuel and other essential commodities in his daily life.
As the discussion went deeper, I explained to him one of the critical tax proposals in this year’s budget, which is the integration of the NIN as the TIN. He wondered what this meant and how it would impact his farming activities.
This farmer whispered to me that he can earn over Shs100 million from his coffee farm of about 20-30 acres (he is not sure of the exact expanse of his land but estimates it as such) annually in a good year. This farmer, along with many other Ugandans who have not previously engaged with tax matters, must awaken to the impending reality of their responsibilities. As they transition into the realm of taxation through the NIN, it is essential to understand what to expect as new taxpayers in this evolving landscape.
President Museveni and First Lady Janet Museveni register to renew their national identification cards at State House Nakasero on June 10, 2025. PHOTO/PPU
One will be required to file a tax return either quarterly or bi-annual for provisional filing, but most importantly a final self-assessment return at year end.
This excludes individuals whose sole source of income is from employment, as their employers comply monthly. For my village friend, the farmer, this marks the beginning of the tax compliance journey. Filing tax return is a technical process that may require the services of a tax advisor to understand income earnings and assist with the filing of returns and payment registration, which culminates in generating a Payment Registration Number (PRN).
Alternatively, one can visit the nearby URA office for support. In cases where one forgets to file within the statutory filing deadline, which is typically within six months after fiscal year end, the tax laws impose statutory penalties.
These penalties inter alia include the higher of Shs200,000 per month or 2 percent of the tax payable, calculated from the chargeable income. Additionally, the tax authority is mandated to estimate what may be your chargeable income and the corresponding tax. This could result in a tax dispute, potentially leading my farmer friend to the courtroom, possibly the Tax Appeals Tribunal (TAT), or even escalating the matter to the High Court and ultimately the Supreme Court. These are the realities of tax matters and the impact they could have on ordinary taxpayers, who once thought it was not their concern.
The writer, Hamza M Ssali, is a senior manager Tax at EY, Kampala.
