Uganda Revenue Authority (URA) Commissioner General, John Rujoki Musinguzi (pictured) has revealed that the tax body’s revenue target for the second half of the FY 2020/21 (January to June 2021) is Shs12.25 trillion.
This represents 62.20 percent of URA’s annual target for 2020/21.
During his end of year performance briefing to the media on 29th December 2020 at URA headquarters in Nakawa, Kampala, Musinguzi revealed that URA started FY2020/21 at the backdrop of a COVID-19 economic slump characterized by revenue shortfalls in April, May and June 2020.
“It has been very challenging both for the taxpayers and to URA. Nonetheless, we are steadfastly moving towards our annual target,” Musinguzi said.
He added that despite the significant revenue decline in April, May and June 2020 mainly due to the lockdown characterized by a slowdown in economic activities, URA saw signs of recovery and improvement from July to November 2020.
“From July to date, we’ve seen growth in revenue posting collections amounting to UGX 8.7 Trillion (By 29th Dec). In addition, since February we have recovered UGX 571.26 billion in arrears. This is remarkable performance for which we thank our taxpayers and we believe that they will support us to meet this target,” he said
Generally, he explained, the domestic revenue collections trajectory has maintained the growth tangent of the first quarter performance, showing signs of recovery in the months of July to December 2020 averaging at 2.548%.
Specifically, he said, September (9.9%) and November (7.44%) registered the highest growth in revenue while August (-2.16%) and October (-3.46%) recorded a slump in revenue collections.
According to URA, Customs revenue collections registered the first COVID-19 shocks in March 2020 with the disruption of international production and supply chains. April was the worst hit month with customs revenue declining by 46.48% compared to April 2019. However, in July – December, 2020 the tax body registered signs of recovery with a growth of 7.94 % and 7.38% in customs revenue in August and September 2020.
Musinguzi added that URA’s July to December collections have been above the set target for the period.
URA’s Taxpayer Register also expanded.
“Between February – November 2020, we have registered 92,578 new taxpayers (5.92% growth). This positive growth rate would have hit double digits but was handicapped by the COVID-19,” Musinguzi revealed.
He added that between February – November 2020, URA noted a drop in the average filing ratios (VAT=84.13% and PAYE=74.54%).
“We encourage all clients who have obligations to file returns by 31st December to do so before the deadline,” he noted.
Imports Vs Exports
COVID-19 saw a slump in imports starting in Feb-May 2020, the highest decline being 35.36% in April 2020. However, there’s been growth since June, the highest being 46.51% in September 2020.
In the COVID period Feb-Nov 2020, imports from the top 5 countries declined with the exception of Tanzania and India. Imports from China declined by 19.95% yet for some time, around 30% of Uganda’s imports have been from China.
URA says Uganda’s exports slumped in March-April 2020.
“In the months after April, exports picked up and grew steadily to date. The highest growth was recorded at 143.37%,” Musinguzi said.
Imports from Uganda’s top 5 countries in the COVID19 period (UGX Bn)
|Imports Feb- Nov 2019||Imports Feb- Nov 2020||Growth Feb –Nov 2020|
Source: URA Custom’s data
YOU RECORDED SURPLUSES DURING THIS PERIOD, HOW HAS THAT BEEN POSSIBLE?
According to Musinguzi, the recorded revenue performance discussed above was a concerted effort involving integrity enhancement measures, Voluntary disclosure, Electronic Fiscal Invoicing and Receipting Solution (EFRIS), Digital Tracking Solution/Tax Stamps and Alternative Dispute Resolution mechanism.
“We have made Integrity a priority core value at URA and renewed our commitment to Professionalism and Patriotism. We are renewing the purpose that our staff attach to their role, as a service to their nation, and servants to Ugandans. We have upgraded and strengthened the staff integrity function with ZERO tolerance to corruption. Staff are continuously engaged and urged to work with Integrity, Patriotism and Professionalism which has reduced revenue leakage,” Musinguzi said of URA’s stance on integrity.
On Voluntary disclosure, he said: “We have encouraged taxpayers to disclose information about their Businesses to URA without any prompting action by URA to enable them benefit from pardons on Penalty and Interest which would result from the tax offences. We have so far recovered over UGX 17.2bn from this program and we encourage more clients to use this opportunity before URA starts enforcement action.”
Electronic Fiscal Invoicing and Receipting Solution (EFRIS)
He noted that URA registered a 93.7% performance in enrolling clients onto the Electronic Fiscal Receipting and Invoicing System (EFRIS).
“As of today 18,003 VAT registered taxpayers are enrolled on the system against a target register of 19,207. We have trained over 4000 clients including business communities, business owners, financial sector players and tax consultants to use the EFRIS system. These are in addition, to 13,312 non VAT taxpayers that we have enrolled on EFRIS against the targeted 32,519 non-VAT taxpayers,” he said.
He added that whereas they planned to have all VAT registered taxpayers onboarded on EFRIS by October 2020, their stakeholders requested for an extension due to implementation and integration challenges.
“We agreed with the taxpaying community to extend the implementation deadline by 3 months up to 31st December 2020 to allow clients to adjust and attend to the challenges. We have continued to train and give technical support to active EFRIS users. However, after 31st Dec 2020, URA will not extend further but will expect all VAT registered clients to be enrolled on EFRIS and to issue fiscalised receipts and invoices,” he said.
Digital Tracking Solution (DTS):
He added that between Jul-Dec 2020, URA registered 145 manufacturers and 42 importers against a target of 107 and 33 respectively.
“As a result of the DTS, URA has registered surplus in Local Excise Duty not seen in over 3 years,” URA said.
Alternative Dispute Resolution
He noted that collections from alternative dispute resolution to amicably settle outstanding tax matters were UGX 204.5 Billion by December 2020. It is a win-win solution to both the taxpayer and URA.
WHAT IS NEXT FOR 2021?
Musinguzi said that URA will consolidate its gains to create sustainable programs that meet the needs of our various clients emphasized on Patriotism, Integrity and Professionalism.
“Our revenue target for the second half of the FY 2020/21 (January to June 2021) is Shs12.25 trillion, representing 62.20 percent of our annual target for 2020/21,” he said.
He added that URA will continue to focus and commit on promoting accountability among its human resource to ensure that they all serve with Integrity, Patriotism, Professionalism and total commitment.
URA will also enforce implementation of the Electronic Fiscal Receipting and Invoicing Solution (EFRIS).
“We encourage all VAT registered Taxpayers to enrol for this solution before 1st January 2021,” he said, adding: “We shall increase the on boarding of clients on Digital Tracking Solution (DTS), and also increase coverage of more products and services.”
He added that they shall enhance rental revenue mobilisation using block chain technology (Rental Tax System).
URA shall also emphasize on enhanced use of technology to improve service delivery.
“We have purposed to demystify the tax regime and make it easily understood by everyone, through aggressive and elaborate tax education programs aimed at equipping our taxpayers with knowledge of both their rights and obligations,” he said.
He added: “We will continue to adopt the use of enabling technologies such as artificial intelligence and data analytics to identify potential revenue. (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).”
He added that URA is currently revamping its contact centre that will enable the tax body to provide real time service support to clients.
“We are also collaborating with various stakeholders in the private sector and government agencies especially in areas of information exchange and system integrations to expand our tax register and accurately assess tax,” he said.
In conclusion, Musinguzi said: “At URA, we are fully committed to continue supporting our esteemed taxpayers. We encourage you to always approach us through our engagement channels in case you need any form of assistance. I wish to encourage all Ugandans to follow SOPs at all times as provided for by MoH together we shall fight the COVID 19 pandemic.
On behalf of Uganda Revenue Authority, we wish you all a prosperous year 2021 and may this year be a year of abundant harvest for all our taxpayers.”