John R. Musinguzi, the URA Commissioner General addressing the press
Uganda Revenue Authority (URA) collected net revenue of Shs4.459 trillion in the first quarter of FY 2021/22, posting a growth of 9.57 percent in comparison to the FY 2020/21. In nominal terms, this reflects a growth in revenue of Shs389.47 billion. It should however be noted that, the outturn of the first quarter is short of its target of Shs4.959 trillion by Shs499.49 billion.
This was revealed by John R. Musinguzi, the URA Commissioner General during the First Quarter( July 2021 To September 2021) Press Brief held at URA headquarters in Kampala today October 21, 2021.
Having achieved a growth in revenue of 14.99% in the FY
2020/21, URA is expected to collect Shs22.363 trillion in the
FY 2021/22 which is Shs3.1trillion over and above last
URA has registered continuous growth in net revenue collections in the last five years. The highest year to year growth was observed in the FY 2018/19 (17.82%) and the lowest recorded in FY 2020/21 (1.62%) which is mainly accredited to the adverse impact of COVID-19.
“In FY 2021/22, there are signs of economic recovery as portrayed by a growth in revenue of 9.57%,” Musinguzi said.
Domestic revenue performance
Domestic revenue collections during the first quarter of FY 2021/22 were Shs2.655 trillion, registering a growth of 8.11 percent (Shs199.10 billion) in comparison to same period in FY 2020/21. However, the collections were below the target of Shs3.096 trillion by Shs440.75 billion, Musinguzi revealed.
He added that the growth of 9.57% is partly attributed to the URA administrative initiatives like arrears management which resulted into a revenue recovery of Shs322.63 Billion and cargo management to curb under and miss declaration which led to a revenue gain of Shs11.51 Billion.
“These supplemented collections from normal flows,” he said.
Sectoral contribution to revenue
In terms of sectors, 74.02 percent of the revenue was generated from the top 5 sectors during the first quarter of FY 2021/22. The wholesale and retail trade sector had the biggest contribution, which amounted to Shs1.361 trillion (30.10 percent). The manufacturing sector followed with a contribution of Shs1.067 trillion (23.61percent). The financial activities contributed Shs353.66 billion (7.82 percent), while Shs338.36 billion (2.65 percent) was generated from the information and communication sector and Shs202.98 billion (4.49 percent) from public administration.
On a year to year basis, the Arts, Entertainment and Recreation sector grew by 97.24% mainly due to arrears recovery of Shs7.22 Billion from the gaming activities; Water supply, sewerage, waste management and remediation activities grew by 64.97% due to payment of arrears for the period between February 2021 and August 2021 worth Shs9.62 billion paid in the July to September. The Mining and Quarrying sector grew by 41.69% mainly arising from out of court settlements from Oil and Gas activities.
“However, there was a decline in revenue collected from some sectors in the first quarter of FY 2021/22, compared to same period in FY 2020/21. Revenue from the Electricity, Gas, Steam and Air conditioning supply sector declined by 17.31%, the Construction sector declined by 15.95% and the Real estate sector declined by 4.67%. This decline is partly explained by continued Government restriction on some sectors which has affected the supply chains and hence disrupted the on-trade market i.e. restaurants, hotels, events, institutions etc. This has resulted into them operating below capacity,” Musinguzi said.
He added: “This has consequently influenced Domestic Taxes performance as depicted in VAT underperformance with a deficit of Shs223.64 Billion, Local Excise Duty deficit of Shs77.27 Billion, Corporate tax deficit of Shs24.74 Billion and Rental income tax deficit of Shs19.49 Billion. On the other hand, the International trade tax collections performance was mainly attributed to deficits registered by petroleum duty (Shs43.34 Billion), import duty (Shs68.27 Billion) and withholding taxes (Shs135.80 Billion).”
This, he said, is mainly explained by a number of factors including the decline in fuel volumes: Despite increase in pump price by fuel stations, there was a general decline in fuel volumes imported by 5.84 percent (30.39 million litres) in comparison to July to September FY2020/21. Petro declined by 10.24 percent (24.49 million liters), diesel declined by 2.11 percent (5.24 million liters) and Kerosene declined by 23.16 percent (0.73 million liters).
There was also a decrease in tax yield: The tax yield from imports decreased by 91.62 percent (Shs8.655 trillion) compared to the same period last financial year. Top tax yielding items which registered decline in taxes during the period July to September FY2021/22 were; persons and goods motor vehicle by Shs345.36 billion, palm oil by Shs224.90 billion, wheat/meslin Shs148.45 billion, petroleum oils Shs113.46 and electrical apparatus Shs116.07 billion among others.
Tax policy on the export of gold also impacted on revenues: The government imposed a levy of 5 percent on a kilogram of processed gold and 10 percent on the value of unprocessed minerals. For the period July to September 2021, no gold was exported 8 and didn’t not yield any revenue in the period.
“However, gold exporters are still in negotiation with the government regarding this tax having disputed the applicable rate. This largely explains the deficit of Shs27.30 billion in export levy,” Musinguzi said.
Expansion of the taxpayer register
During the first quarter of the FY 2021/22, 65,666 new taxpayers were added to the taxpayer register. By the end of September 2021, the taxpayer register had 1,849,159 taxpayers, Musinguzi said.
According to Musinguzi, the revenue target for the remaining period of the FY 2021/2022 (October 2021 to June 2022) is Shs17.404 trillion which is 77.82% of the annual target of Shs22.363 trillion out which URA is targeting Shs6.104 trillion for quarter two.