Uganda Revenue Authority (URA) has been tasked to collect revenue amounting to Shs21.81 trillion in 2020/21 budget, comprised of tax revenue amounting to Shs20.219 trillion and non-tax revenue of Shs1.591 trillion.
Finance Minister Matia Kasaija made the revelation today while delivering the 2020/21 budget speech at the fifth and final session of the 10th Parliament under the theme: ‘Stimulating the economy to safeguard livelihoods, jobs, business and industrial recovery’.
The Shs21.81 trillion target translates into a revenue effort of 14.3 percent of GDP.
John Musinguzi Rujoki (pictured), the new Commissioner General of URA, who replaced Doris Akol recently will have a huge task to beat this target given the slowed economic activity as a result of the COVID-19 pandemic.
To achieve this target, Government has come up new interventions including further roll out use of digital tax stamps and expanding the range of products covered in order to deter under-declaration of production and importation. Digital stamps also ensure that goods on the market meet the required health and safety standards;
Government will also widen the scope of the income tax withholding agents across all sectors in order to broaden the tax base, enhance rental income tax collection and compliance by implementing a digital collection solution, as well as gazette rental income tax chargeable in different geographical areas for taxpayers who do not voluntarily declare their rental income.
Kasaija also added that Government will gazette VAT withholding agents with an applicable VAT rate of 6 percent, and provide for penalties for failure to withhold; and Rollout the use of Electronic Fiscal Devices (EFDs), which are – cash registers interconnected to the Uganda Revenue Authority, to improve record keeping and tax compliance.
“… the modest adjustments to tax rates that have been made include the excise duty rate on fuel; and adjustments to improve competitiveness in the region, support compliance, remove ambiguities in the legislations as well as close loopholes that may lead to revenue leakage. In order to promote import substitution and the development of local industries, we have increased import duties on goods that are produced or can be produced locally. The import duty on agricultural products has been increased to 60 percent and other products to 35 percent,” Kasaija said.
Hitherto, he said Uganda has been importing refined industrial sugar yet it is a surplus producer of sugar.
“We have agreed with sugar manufacturers to produce refined industrial sugar locally and we shall protect them from imports,” he said, adding that in order to support agriculture, VAT on the supply of agricultural equipment will be exempted.
“The supply of processed milk will also be VAT exempt to enhance the price competitiveness of milk produced in Uganda. In order to respond effectively to the covid-19 pandemic, taxes on supplies for diagnosis, prevention, treatment, and management of the epidemics, pandemics and health hazards, will be exempt from customs duties,” he added.
The Resource Envelope of Financial year 2020/21 totals Shs.45.493 trillion of which Domestic Resources amount to Shs.25.58 trillion.
Domestic Financing amounts to Shs3.56 trillion while External Financing consists of Project Support of Shs9.515 trillion and General Budget Support Shs2.906 trillion. Domestic re-financing amounts to Shs7.486 trillion and Appropriation in Aid is Shs215.6 Billion.
The total Expenditure amounts to UShs37.792 trillion of which Recurrent Expenditure is UShs19.787 trillion and Development Expenditure is UShs18.004 trillion.
In his speech, President Yoweri Museveni said corruption in URA had been cleaned. He blamed Uganda’s low tax to GDP ratio to corrupt officials who have since been “dispersed”.