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Taxes paid by Ugandans are Inadequate to Drive Significant Country Development, says URA chief

Stephen Kalema by Stephen Kalema
1 year ago
in Business, Finance
50 3
URA Commissioner General John Musinguzi

URA Commissioner General John Musinguzi

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In the course of conversations over Uganda’s budget, the Commissioner General of the Uganda Revenue Authority (URA), John Musinguzi has offered a noteworthy viewpoint. The head of URA, who emphasises the importance of taxes in national development, argues that Ugandans’ existing tax contributions might not be sufficient to support significant national advancement.

While speaking on UBC TV on Wednesday night, he confirmed that it’s very hard for Ugandans to realise the country developing from their taxes becuse most of the taxes collected go to debt servicing.

“Where we are as a nation, is a very defining moment, that’s why we want to engage with everybody coming on the board. We must know that the foreign support that we have been getting by way of donations and loans is diminishing because of the reasons we all understand. Secondly, our tax GDP is at the bottom 14 per cent below the average for Sub-Sahara Africa which is 16 per cent,” he said.

He added, “Most of the monies we collect go to debt servicing! How can we develop? There is no country which can develop when they are collecting less than 20 per cent of their GDP. The tax burden for Uganda is 11.7 per cent and in the ranking of the world Uganda is at 140 out of 172 countries so it is very clear that whatever we are contributing as tax is small and can not foster development not make us economically independent!”

According to Musinguzi, at the moment when traders are on strike due to Electronic Fiscal Receipting and Invoicing Solutions, the issue must be focused on engagement and see how everybody is accommodated. “The subject to engage on and discuss is how can we engage everybody that is playing a role in this paying their fairs of tax. Engagements with citizens, academia, and leaders will give us the right answers and that’s how we can build our country Uganda but demonstrations, threats and strikes will not work.”

Understanding your tax

One of the taxes that have made rounds in the ongoing strike is the VAT (Value Added Tax) which has been in existence since 1997 and is an indirect tax but very few Ugandans understand how it works. VAT is paid by a consumer because it’s a consumption tax and the threshold is about Shs150m per year. On average the trader needs to make sales of Shs110,000 per day.

Even though the threshold is low, out of over 46 million Ugandans only 33000 taxpayers are registered for VAT, which clearly shows that the degree of voluntary compliance by Ugandans is low. Out of an active population of about 10 million people engaged in businesses, or earning only 33000 Ugandans pay VAT. This also shows a very big of knowledge about the taxing system in the country.

As a way of sorting out challenges of low voluntary compliance, tech like Electronic Fiscal Receipting and Invoicing Solution (EFRIS) was introduced in 2019, to help traders run their businesses well without the scepticism of being overassessed by URA, secondly, this fully flagged accounting software will also help URA to declare the trader’s actual stocks since in most cases traders have been under-declaring their stocks to URA.

Meanwhile an Electronic Fiscal Receipting and Invoicing Solution. EFRIS entails the use of Electronic Fiscal Devices (EFDs), e-invoicing, or direct communication with business transaction systems to manage the issuance of e-receipts and e-invoices under the Tax Procedures Code Act 2014.



Do you have a story in your community or an opinion to share with us: Email us at editorial@watchdoguganda.com
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