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Analysis & Opinions

How URA Pulled Off Shs1 Trillion Revenue Surplus In 1st Quarter Of 2020/21

John R. Musinguzi, the URA Commissioner General addressing the press today

Uganda Revenue Authority (URA) recorded Shs4.07 trillion net revenue collections in the first quarter of 2020/2021 (July to September 2020) against a target of Shs2.99 trillion, thus representing a performing of 135.69%.

This was disclosed by John R. Musinguzi, the URA Commissioner General while addressing the press about Taxpayers Appreciation Season 2020 and the tax body’s performance for the first three months of 2020/21 Financial Year. The event was held at URA’s headquarters in Nakawa on Tuesday morning.

The URA boss noted that a significant surplus of Shs1.07 trillion was posted during the period under review.

“Revenue growth of Shs64.8bn (1.64%) was registered during the period July to September 2020 compared to July to September 2019,” Musinguzi revealed.

This financial year 2020/21 (July 2020 to June 2021), URA is expected to collect Shs19.69 trillion (revised), compared to what was targeted last financial year 2019/20 at Shs20.34 trillion.

URA boss noted that the growth registered in September 2020 (8.27%) and August 2020 (1.40%) shows resurgence from the impact of COVID-19.

According to URA, declines in revenue were posted in April, May, June and July 2020 as a result of the COVID-19 pandemic.

URA says domestic taxes collections during the period July to September 2020 were Shs2.45trillion, performing at 131.66% and Shs590.75bn above the target.

“In addition, the domestic taxes collection registered a growth of Shs51.01bn (2.12 percent) during July to September 2020 compared to the period July to September 2019,” Musinguzi said.

He revealed that International trade tax collections in July to September2020 were Shs1.714 trillion, performing at 138.87 percent with a surplus of Shs479.79bn.

When compared to the period July to September 2019, customs tax collections grew by Shs23.93bn (1.42 percent) in July to September 2020.

How various sectors performed

In the period July to September 2020, 75.88% of the revenue collected was from the top five sectors.

“The wholesale and retail sector contributed 30.66%, the manufacturing sector contributed 23.17%, 9.30% of the revenue was from the information and communication sector, while the financial and insurance services contributed 7.69% to the revenue in the period,” URA boss revealed, adding: “Public administration sector contributed 5.06%. There was growth in revenue in some key sectors like manufacturing which grew by 18.54%, information and communication grew by 20.49% ,while revenue from the wholesale sector grew by2.30%.”

He added that significant declines in revenue were registered in some sectors.

According to URA, revenue from accommodation and food services declined by 58.82%, education sector declined by 31.94%, revenue from Arts, entertainment and recreation declined by 55.59%, while a decline of 33.56% was registered under water supply.

URA attributes the decline to a slowdown in business in these sectors owing to COVID-19 induced lockdown and restrictions.

Reasons For The July-September  2020  Revenue Performance

Musinguzi revealed that Local Excise Duty contributed a surplus of Shs107.87bn, which was mainly from mobile money transfers (Shs17.52bn surplus), phone talk time (Shs12.51bn surplus), beer (Shs27.69bn surplus) and Over the Top (Shs8.27bn).

“The surplus can be explained by increased transactions via phone through voice and text owing to limited movement of people amidst the COVID-19,” Musinguzi said, adding: “Beer production increased by 7.34% in the period, which was matched by an increase of 6.5% in beer sales.”

He noted that VAT collections were above target by Shs179.35bn.

“Cement contributed a surplus of Shs28.53bn, phone talk time, a surplus of Shs17.89bn, wholesale and retail a surplus of Shs22.56bn while spirits registered a surplus of Shs12.84bn,” he said.

He noted that the ongoing infrastructure developments in the country have boosted demand for cement leading to an increase in sales by 28.63%.

The production and sale of spirits increased by 42.77% and 45.68% respectively, owing to spirits being a raw material to the highly demanded sanitizers, URA said.

The URA boss further revealed that the implementation of the Digital Tracking Solution (DTS) boosted collections and has aided the enforcement and tracking of locally manufactured and imported products.

“Corporation tax registered a surplus of Shs35.2bn which is mainly attributed to URA’s pursuit of the alternative dispute resolution as a way of resolving outstanding tax matters,” he said.

Musinguzi noted that International trade taxes performed above target as result of the reopening of economies and supply chains.

“Uganda’s imports grew by 31.89% in July to September 2020, compared to the same period in 2019,” Musinguzi said, adding: “Imports increased by 7.41%, which explains the international trade performance.”

The URA boss revealed that  in a bid to increase compliance and influence taxpayers’ behavior, various tax administrative measures have been implemented to support revenue generation. These include; Integrity Enhancement, Voluntary disclosure, Enforcement operations, Alternative Dispute Resolution and Full implementation of  compliance  initiatives  like the Electronic Fiscal Invoicing and  Receipting Solution (EFRIS), and  the  Digital  Tracking Solution.

“The integrity function has been upgraded and strengthened to focus on effective staff compliance management and  ZERO  tolerance  to corruption. Staff are continuously engaged and urged to work with Integrity,  Patriotism  and Professionalism,” Musinguzi said.

He added: “Since  we  started  the  Voluntary  disclosure,  a  total  of  Shs16.5bn  has  been recovered. We  urge  taxpayers  to  take  advantage  of  the  Voluntary  Disclosure program  at  the  earliest  time  possible  before  URA  commences  aggressive compliance actions.”

He revealed that despite the interruption of the COVID-19 pandemic from March 2020, DTS has resulted into increased enrollment of taxpayers for the DTS gazette products.

“During the first Quarter of the FY 2020/2021, we have continued to embrace the use  of  Alternative  Dispute  Resolution  (ADR)  mechanisms  in  resolving  some  of the  disputes  with taxpayers.  Significant  achievements  were registered in  this area  with  some  cases  being  resolved  amicably  out  of  Court/  Tax  Appeals Tribunal. During this period, more than Shs100bn has been collected through amicable settlements. ADR provides a win-win solution to both the taxpayer and URA,” Musinguzi said.

He added: “We, therefore, encourage  taxpayers  to  embrace  the  use  of  Alternative  Dispute  Resolution mechanisms  by  approaching  us  with  feasible  proposals  for  settlement  of  the disputes  with  URA  for  discussion. We are more than ready to pursue this approach.”

Outlook For The Financial Year 2020-21

Musinguzi noted that URA has a huge task ahead as the authority is expected to collect Shs4.4 trillion in tax revenue in the second quarter of 2020/2021.

He noted that going forward, URA “will continue  to  focus  on  promoting  accountability  among  our  human resource to ensure that we all serve with Integrity, Patriotism, Professionalism and  total commitment.”

Top URA bosses were present as Musinguzi addressed the press

“ We  have  negative  tolerance  to  corruption and  I  am calling  upon  the  public  and  the  taxpaying  community  to  join  us  in  this struggle,” he said.

The URA boss added that URA will leverage on the use of technology to hit its revenue collection targets.

“We have introduced and we will continue to promote the use of technology to enhance the taxpayers’ experience and Revenue Administration,” he said.

He added: “We are therefore putting more emphasis on the use of technology in the following areas; (i)Surveillance for wider coverage of porous borders by use of satellite technologies,  Regional  Electronic  Cargo  Tracking  System,  drones and enhanced cross-border intelligence information exchange.(ii)Increased automation of the key business processes. As you may be  aware,  we  have introduced  the  Auto-conversion  of  the  transit entries (WT8) into ware housing entries (IM7). This auto-conversion will therefore mean that, all transit entries after “validation” will automatically    assess    into    warehousing    entries,    except    for government project cargo. This change will lead to reduced clearance time  at  arrival  by  over  48  hours,  instant  cargo  offloading  and examination  at  warehouse,  less  cumbersome  clearance  of  cargo from   the   warehouse,   improved   cargo   and   bond   control   and monitoring. The general public is therefore hereby informed of this major change in Customs Clearance process.(iii)Enhanced  use  of  technology  to  improve  service  delivery. The focus will be improved accessibility and simplicity of our services. (iv) Tax  education. We recognize  that  tax  education  remains  a  major area of focus  for us  to ensure that the taxpayers fully understand their  rights  and  obligations.  We  will  therefore  deploy  a  number  of technologies  to  educate the  public  and  taxpayers.  This  will  also include the online  tax  education  webinars  and “How  To”  video tutorials of our services that we have already rolled out. I want to thank  the  public  that  have  enthusiastically  embraced  the  online approach of engagement given the current dispensation.(v)Data analytics. We will continue to focus on use of data analytics to enhance our efficiency in evidence based decision making. (vi) Continued Rollout of DTS and EFRIS We are continuing to increase  the onboarding of clients on  Digital Tracking Solution (DTS),Electronic Fiscal Receipting and Invoicing Solution (EFRIS) and also increase coverage of more products and services.”

Musinguzi added that URA will also focus on capacity building and skilling of staff technical competences.

“We continue to skill our staff and build core specialized tax capabilities in core business  areas  such  as  tax  audit,  tax  investigation, taxation  of  the digital economy, International tax and data analytics focusing on a data-driven approach to promote revenue generation and enhanced voluntary compliance,” he said, adding stakeholder collaboration and engagements will also be given priority.

“We   have   embarked   on   improving   our   stakeholder   relations and engagements with the private sector and government agencies to leverage on each other’s strength in achieving our  objectives.  Key areas of collaboration are in  information  exchange, system  integrations  and capacity development,” he said.

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Taddewo William Senyonyi
https://www.facebook.com/senyonyi.taddewo
William is a seasoned business and finance journalist. He is also an agripreneur and a coffee enthusiast.

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