URA failed to meet its half-year tax collection target of Shs11 trillion due to covid-19, says Musinguzi

The Commissioner-General of Uganda Revenue Authority (URA), John Musinguzi Rujoki has revealed that the Authority failed to meet its half-year tax collection target of Shs11 trillion because of covid-19.

Mr Musinguzi made this revelation during a press conference at URA headquarters in Nakawa on Wednesday. He said the Ministry of Finance gave URA a revenue target of Shs22.4 trillion for Financial Year 2021/2022. which is 16.10 per cent higher than the actual revenue collected from the last financial year.

He however noted that because of covid-19, some key sectors which formally used to contribute a lot to the country’s revenue collection were affected thus failing to meet their half-year target. (From1st July to December 2021)

“During our first half, there was a decline in revenue collection from the following sectors, in comparison to FY 2020/21, Information and communication declined by 14.55 per cent, Electricity, gas, steam and air conditioning supply by 37.79 per cent, Real estate activities by 10.78 per cent, Construction sector by 14.06 per cent. The decline is attributed to a slowdown in business in these sectors resulting from the Covid-19 pandemic impact,” Musinguzi noted.

He added that as a result of the pandemic, URA’s net revenue collections for the first 6 months were Shs10,163.09 billion against a target of Shs11,063.90 billion, representing 45.44 per cent of the annual target. A shortfall of Shs900.81 billion was incurred with a performance of 91.86 per cent.

“In this period, domestic tax revenue collections were Shs6,229.62 billion against a target of Shs7,180.94 billion, registering a shortfall of Shs951.32 billion, and performance of 86.75 per cent. The shortfalls were from direct domestic taxes (Shs273.61 billion), indirect domestic taxes (Shs487.20 billion) and Non-Tax Revenue (NTR) (Shs190.51 billion). 20.03 per cent of the domestic tax shortfall was from Non-Tax Revenue (NTR).”

Customs tax collections were Shs4,076.18 billion against a target of Shs4,102.51 billion, posting a shortfall of Shs26.33 billion, and a performance of 99.36 per cent.

Mr Musinguzi however noted that despite the shortfalls, there was a year-to-year growth of Shs389.78 billion (10.57%) realized this year compared to the same period in the previous Financial year 2020/21.

Sectors that performed well from July to December 2021:

Mr Musinguzi noted that amidst challenges of Covid-19, some sectors have performed well in the first half of FY 2021/22, whereby 75.46 per cent of the revenue was generated from them.

The top 5 sectors include; The wholesale and retail trade sector which had the most significant contribution, amounting to Shs3,031.01 billion (29.41 per cent).

The manufacturing sector was the second with a contribution of Shs2,413.36 billion (23.42 per cent). The financial activity sector contributed Shs1,064.43 billion (10.33 per cent). The information and communication sector was the fourth contributing Shs880.97 billion (8.55 per cent) and Public Administration contributed 3.75 per cent.

“The revenue growth in the Wholesale and retail trade sector is attributed to the wholesale of solid, liquid and gaseous fuels and related products. The growth of revenue from financial activities is attributed to contributions by mobile commerce due to gazetted regulations by Bank of Uganda’s directive to all telecom companies to separate financial services from telecom services,” he said.

Meanwhile, Indirect tax collections were Shs 2,296.38 billion against a target of Shs2,783.58 billion, registering a performance of 82.50 per and a shortfall of Sh487.2 billion.

The Non-Tax Revenue (NTR), including Appropriation in Aid (AIA), collected was Shs556.50 billion against a target of Shs747.01 billion, posting a deficit of Shs190.51 billion and a performance of 74.50 per cent According to Mr Musinguzi NTR contributed Shs369.69 billion with a performance of 93.74 per cent, while AIA contributed Shs186.80 billion with a performance of 52.98 per cent.

The shortfall is partially caused by the delay of the on-boarded Ministries, departments and agencies (MDA) to adopt the collection of NTR through the URA portal, thus significantly affecting the NTR collections expected from the newly on-boarded entities. “Despite the directive and several engagements, some MDAs have not heeded the call to onboard their collections through the URA portal.”