Uganda needs a tax ombudsman

Globally, it is recognised that the establishment of a tax ombudsman or “Office of Tax Ombudsman” holds the potential to address the complexities of a country’s tax systems, address the complaints against the tax administration, ensure that the rights of taxpayers are respected and that the services of the tax administration are provided in an equitable and efficient manner.

Whereas Uganda Revenue Authority’s  Client Service Charter promises prompt refunds, swift processing of exemptions, and courteous treatment for taxpayers, the ongoing stand-off between traders and URA over the Electronic Fiscal Receipting and Invoicing System (EFRIS) implementation highlights the disconnect. Based on concerns raised by the business community, there is need to review and reshape the objectives of the EFRIS system.  

More still, the EFRIS enforcement methods have come under public scrutiny .

URA has tried to create avenues of addressing service-related complaints through issuing the client service charter, increasing dialogue with taxpayers, taxpayer education and awareness and tried to change the face of tax administration. However, delays plague other areas of URA service delivery, such as audits routinely exceeding the stipulated six-month limit (as seen in East Africa Cranes Limited vs URA TAT No 51 of 2018), requests for irrelevant documentation for audit purposes, and multiple audits for the same tax period create additional administrative burdens for taxpayers. Delayed response on tax advisory often taking months to arrive, have hindered informed business decision making affecting the investment potential in the country.

These service delivery problems cannot be addressed by the courts of justice as they fall outside the realm of legal disputes and pertain to URA’s internal procedures. This lack of a proper recourse mechanism can push desperate taxpayers towards unsavory options to expedite service, potentially breeding a culture of corruption and influence peddling. While URA has an internal complaint system, it lacks the necessary independence to effectively address these issues.

Over the years, the Tax Justice Alliance Uganda has advocated for the creation of a tax ombudsman office in line with the Domestic Revenue Mobilisation Strategy for FY 2019/20- 2023/24.

The absence of the ombudsman office in Uganda has contributed to various challenges that have escalated and drawn the attention of the President. For example, where URA demands payment of a penalty within three days instead of the statutory 28 days, the traders would complain to the ombudsman. A business owner facing an overly lengthy audit can file a complaint with the tax ombudsman, who then intervenes to ensure a timely resolution within the legal timeframe. Taxpayers seeking guidance from URA would not have to wait months for clarification on tax implications. With this office, traders’ complaints would be listened to and addressed through a proper channel and the same would be resolved amicably.

By creating a tax ombudsman office, Uganda can build a more transparent, accountable, and taxpayer-friendly tax administration system. This win-win for both the government and taxpayers will lead to a more robust and efficient tax collection process.

The fact that a fair and efficient tax system benefits everyone cannot be over-emphasised. When taxpayers experience quality service from the tax authority, it fosters a culture of voluntary compliance and disclosure. This translates to increased tax revenue for the government, which can be used to improve public services and infrastructure.

Mr Mark Mutumba is tax/trade policy analyst at SEATINI – Uganda.