Up until now, dishonest people have tried hard, and partly succeeded in convincing a significant part of the public that the government has introduced a new levy on traders called EFRIS. Unscrupulous businessmen and their leaders have regrettably been joined by self seeking politicians to cause protests and spread falsehoods to the effect that there is a ruthless tax regime milking countrymen and women to the bones.
What then is the truth about EFRIS?
EFRIS is an acronym for Electronic Fiscal Receipting and Invoicing Solution (EFRIS), which has unfortunately been misunderstood by some tradersfor a new tax imposition.
EFRIS is an invention of the tax man- URA to enhance the country’s capacity to collect taxes efficiently and seamlessly both for the benefit of the government and the tax payer. What critics of the invention seem not to tell the public is that the new system doesn’t leave gaps for tax evasion which should be credit to the tax body and the government.
Framers of the EFRIS system designed it to monitor the payment of value-added tax (VAT) and facilitate accurate record-keeping for business transactions, thereby simplifying VAT collection.
Despite its intended benefits, the implementation of this system has met with stiff resistance from the business community. Traders are concerned about what they perceive as double taxation and have criticized the lack of adequate information regarding the system’s operation and objectives.
Furthermore, traders argue that the EFRIS system incurs high implementation costs as it necessitates the use of modern technological tools such as computers or smartphones and additional equipment for printing receipts.
Traders argue that the high import values (previously set) are hindering their ability to clear goods, and the escalating cost of living is rendering essential goods unaffordable to the average consumer.
Were Traders prepared well before EFRIS implementation?
Prior to the implementation of EFRIS, URA is reported to have conducted 81 workshops downtown and established a tax hub in Kikuubo, running for 10 days and registering over 350 participants daily. Additionally, they visited over 110 shops, reaching more than 15,000 establishments.
Because many businesses are deemed unable to afford computers, which were not initially budgeted for to install EFRIS software, URA developed a smartphone application to ease accessibility. This application allows businessmen to issue EFRIS receipts to their clients, facilitating compliance.
At least 97 percent of businesses with a turnover exceeding Shs 150 million are reported tohave registered for EFRIS, with only three percent unregistered. Since the system’s implementation, the VAT collection rate has reached 15%, an encouraging fit for the regime.
Since its launch in 2022, there has been an increase in technology adoption, driven by the acquisition of electronic fiscal devices by various businesses. Additionally, the development of mobile applications and desktop programs has streamlined VAT collection. Initially, EFRIS was introduced to manufacturers and later extended to supermarkets.
Has enough been done to involve stakeholders?
Prior to the demonstrations that rocked the city earlier, URA convened a meeting with city traders represented by umbrella bodies such as the Kampala City Traders Association (KACITA), Uganda Cargo Consolidators, and Kampala Rice Traders. During this meeting, it was agreed to suspend the demonstrations and instead focus on intensifying awareness campaigns about EFRIS. Additionally, URA committed to opening an office in Kibuubo to provide business support services, including assistance with the adoption of new technologies like EFRIS, aiding taxpayers in filing returns, and addressing any other tax-related inquiries. And guess what happened after. Demonstrations!
The tax authority reiterated its readiness to address operational concerns regarding the enforcement of EFRIS and encouraged the business community to reciprocate by demonstrating voluntary compliance and willingness to embrace change and adopt new technologies. They had other plans.
Any gaps to fix?
EFRIS captures what constitutes part of an individual or entity’s VAT. It accounts for expenses incurred in one’s business, subtracting what has been collected at the point of sale.
Rather than being resented, EFRIS should bring satisfaction to taxpayers. There, however, needs an enhancement of awareness of its benefits and educating the public to bar further detrimental spread of misinformation by certain parties. For instance, where individuals below the VAT threshold claim their businesses will collapse, despite not being registered for presumptive tax.
This view is also shared by URA Commissioner General Godfrey Musinguzi Rujoki.
When President Museveni invited a team at the Ministry of Finance led by Permanet Secretary, Ramathan Goobi to acquaint himself with the traders’ concerns over EFRIS and chat solutions, he noted that the problem stemmed from both misconceptions and a desire to evade paying taxes by the traders.
“EFRIS is not a tax; it is a system used to collect tax. Because Ugandans are not accustomed to paying taxes, some evade it while others avoid it. They are resistant to a system that restricts their ability to evade taxes. EFRIS functions like a CCTV camera, monitoring transactions from both the supply and demand sides of the entire ecosystem,” he explained.
“I urge everyone to understand that EFRIS is here to stay. It ensures accurate declaration of earnings from transactions, thereby enhancing revenue generation. It is non-negotiable; we will implement it rigorously to apprehend tax evaders,” Ggoobi asserted.” Goobi stated.
Unfortunately, some traders seem hell bent on being allowed to evade taxes unabated or threaten everyone including the President. They have alleged that the taxes imposed are way to high for them to keep afloat. This is, however, not true. Uganda has the lowest tax regime in East Africa at 11.8%, only above Tanzania at 11.8%.
What need to be done is to enhance efforts to get all stakeholders deeply involved in the process of moving from analogue to digital in pushing for more efficiency in service delivery. The digital era is here to stay and there is no way we can run away from it. We need to embrace both the benefits and challenges of the digitization because its the only way to go.
The Writer is the Deputy Resident City Commissioner for Soroti East Division.
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