The Commissioner General of Uganda Revenue Authority (URA), Mr. John Musinguzi Rujoki has revealed that although Uganda has over 9 million Ugandans eligible to pay tax, only 3 million respond in the affirmative.
While addressing the media on Tuesday at the Uganda Media Center during the launch of the 2023-24 National Budget Month, Mr Musinnguzi said that the culture of paying taxes by Ugandans is still very weak. He however noted that despite the weak culture of not paying taxes, year after year the number of registered taxpayers keeps on increasing.
“It is important to note that through various mechanisms, URA has grown the taxpayer register from 1,594,116 to 3,067,983 taxpayers in less than three years. It is, however, essential to note that the register is only 34 per cent of the 9 million Ugandans eligible to pay tax,” he said.
For the last three years, URA has introduced automation of the tax system, which has tried to eliminate corruption by building tax compliance and winning public confidence through improved service delivery. Currently, tax procedures are simple and transparent. Taxpayers are also educated on tax laws and collection systems, which has enabled them to know their obligations thus a small increase in the number of taxpayers.
However, despite these strategies, Uganda still has a thriving informal sector of up to 80 per cent of the economy, which leaves the burden of paying taxes to only 20 per cent in the formal sector. This has the consequences of overburdening taxpayers, leading to tax avoidance and evasion, shrinking the tax base, and further widening the informality gap.
Recent reports have shown that despite the government’s efforts, there is still little awareness of digitization initiatives such as e-tax and other innovations. There are also infrastructural impediments such as poor internet and power connectivity that limit the innovations, this has also contributed a lot to a small number of people paying taxes.
According to Pauline Nakitende, a Research Associate, at the Economic Policy Research Centre (EPRC), currently, the informal sector accounts for a large proportion of Uganda’s economy in terms of jobs; 91 per cent of non-farm employment, with young people (those aged between 18 and 30) occupying 95 per cent of those jobs. This is too big yet very important as 60 per cent of skills developed in the informal sector are a key part of the transition needed for developing economies.
As a way of bridging the gap, URA has put up with different strategies such as; Enhancing the implementation of the Electronic Fiscal Receipting and Invoicing System (EFRIS). Deliberate enforcement activities and monitoring of Digital Tracking Solution (DTS), Improved service platforms and processes, e.g. new payment options, Enhancing administrative measures to curb the growth of arrears. Increasing engagements and sensitisations of taxpayers,
The mobile office- Tujenge Buses to register and sensitise citizens. Alternative dispute resolution continues to help willing taxpayers, compliance initiatives (audits/vetting), Targeted tax investigations and Improved technology in custom processes.
Commenting on the same, the Permanent Secretary and Secretary to the Treasury (PSST), Ministry of Finance, Planning and Economic Development Mr Ramathan Ggoobi noted that URA and other authorities in tax collection must be supported because the country depends on them and when people fail to pay taxes, the country will continue borrowing.
“Our emphasis in the next Financial Year is to help URA and other agencies in revenue collection to make sure that they can meet their target which is Shs29 trillion of which Shs27 trillion must come from tax collection therefore we need to support them. Ugandans need to support URA, if you know anybody avoiding taxes and is doing business report him/her. This is not a bad act but you are helping your country because we need our tax base to increase so that we to reduce or stop borrowing,” said PSST Ggoobi.
Meanwhile, the cumulative Revenue Performance for the Financial Year 2022/23 as of the end of April 2023 follows as; Cumulatively the net revenue collections were Shs19,388.05 billion against a target of Shs19,945.44 billion representing a growth of Shs2,124.79 billion (12.31 per cent) compared to the period July to April of FY 2021/22.
A performance of 97.21 per cent and a shortfall of Shs557.40 billion has been realized. According to URA, this performance accounts for 77.08 per cent of the FY 2022/23 official annual target of Shs25,151.57 billion.
The arrears stock as of the end of April 2023 was Shs4,815.66 billion, of which Shs808.75 billion were for government arrears and commitments while Shs 4,006.91 billion were non-government tax arrears.
By the end of April 2023, the policy and administrative measures for FY 2022/23 resulted in a cumulative net revenue gain of Shs1,083.79 billion, accounting for 72.25 per cent of the annual target of Shs1,500.00 billion.
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