18 January 2014

Uganda: Despite Challenges, URA's E-Tax System Continues to Register Success

On Jan. 7, David Mutyaba was among ten people waiting at a URA service centre at Crested Towers to return a document. He narrated to The Independent how he started the process of revalidating his two vehicles on December 21 last year and was put on the waiting list for nine days. On Jan. 3, he managed toget a new logbook for only one of the two cars.

"I'm waiting for it, I hope soon. The system is slow, always on and off," Mutyaba said resignedly. "It was worse when the system was down during the Christmas season yet URA had set Dec.31 as the deadline for motor vehicle revalidation."

The electronic tax system codenamed; the Integrated Tax Administration System (e-Tax) is one of the newer appropriate technologies that URA launched as part of its five-year corporate plan (2010-2014) to enhance voluntary compliance. But like Mutyaba's situation shows, it has left a lot of frustrated taxpayers.

The system is used for registration of taxpayers, filing of returns, assessments and payment of taxes. In its implementation, it provides online services to the taxpayer on a 24 hour basis.

It enables the taxpayers to lodge their applications online through the web portal (http://ura.go.ug) from any part of the globe as long as they are connected on the Internet.

Broadly speaking, Uganda Revenue Authority (URA) would say the system has been a success. The tax body collected a sub total of Shs 2.5 trillion from July to October 2013 in revenue. At least 93% of this (Shs 2.3 trillion) was received online via the electronic tax system.

In 2011/2012, out of the total collections of 7.4 trillion, 81.6% (Shs 6.9 trillion) was realized from the E-tax platform. There was an increase of 11.5% points in the subsequent financial year of the revenue collected through e-Tax.

In 2011, e-Tax was linked to the customs' Automated System for Customs Data (ASYCUDA) to further ease transactions. As of July 2012, about 1.4 million payments had been receipted through electronic tax payments including revenue from over 360,000 tax returns.

But though it is contributing over 90% to total tax collection, e-Tax is proving to be a difficult nut for both the taxman and tax payers.

Anyone dealing or intending to deal with URA must do so through a personal Tax Identification Number (TIN). One policeman has applied for a TIN but he says the process has taken him more than two weeks to get feedback; the system "was down."

Sarah Birungi Banage, URA's Assistant Commissioner Public and Corporate Affairs, admits that there are challenges such as intermittent power supply and Internet outages but says the tax body has made contingency plans to ensure that the system is operational 24/7. First she says, the e-Tax is hosted on a central server at their Kampala headquarters, which means that it's not affected by power or network outages even when power or the Internet is off in some parts of the country.

"Also, all URA stations have been equipped with alternative power sources and backup network to ensure continued services.

"The major operational problem has been the frequent fiber optic cable cuts of which URA has no control and has to rely on Internet service providers," she says.

But Mutyaba says the filing process still confuses a lot of people because the web portal has many features and yet most people cannot understand some tax terms.

"I suspect many people are suffering because they do not know how to use a computer, Mutyaba said," yet the tax officers do not want to when stuck. "They tell you to go to an internet café, which requires money," he says.

Ephraim Sentamu Kaddu, the Secretary General of Kampala City Traders Association (KACITA) also agrees that while the system is a positive development, there are bottlenecks. "It saves us costs of hiring services of middlemen, some of whom are unscrupulous but computer illiteracy is a big problem. The majority of Ugandans are computer illiterate; only about 25% and less than 10% of traders are computer literate," he adds.

According to the International Telecommunication Union, only 4% of households in Uganda have a computer, of which only 4.2% have internet access at home and 14% of individuals in Uganda use the Internet. This figure however has kept on improving in the last few years, according to the Uganda Communications Commission. In 2012, the number of internet users doubled from three million in 2009 to over six million users. But it is still very low compared to the international average. Also, bandwidth has increased thanks to the high speed internet that has been made possible by connection to sea cables.

Inadequate information

Also, URA has tried to disseminate information about E-tax filing but it is limited to English and Luganda leaving many other people out of the public education and information process. Kaddu says URA should translate such information into more languages and also simplify some tax terms; as a lay man may fail to understand some features and aspects.

Kaddu, who is a freight forwarding agent and a former URA employee for 13 years, says everybody now is trying to learn how to use a computer, an attitude he says could enable many more people to use the platform confidently. Other impediments cited in using e-Tax include breakdown of the systems and limited internet coverage and access in the country.

The system breakdown causes delays for customs clearance, which in turn escalate the related costs.

With a system breakdown, Kaddu says a trader declaring a consignment at Malaba post from Kenya would definitely lose money. He or she may pay fees such as truck retention fees which range between US $200- 300 (about Shs 500,000 to Shs 750,000) if he does not enter the required and accurate information within 48 hours, the Internal Container Depot (ICD) would also charge him for storage yet the trader's consignment has to compete with those that probably import from Mutukula through Tanzania.

In simple terms, when the network is off, E-tax transactions are impossible; you cannot log on or get verification. You just have to wait.

Due to the absence of the laws governing electronic transactions, URA tells users to print out the e- acknowledgement receipt and return form and submit to the tax office within 10 days after appending one's signature. Without this, URA cannot confirm that one has fulfilled one's filing obligation. This is the document that Mutyaba was waiting to submit at the Crested Towers office. It is not electronic if there are hard copies involved in the process, according to the taxpayers.

"We are declaring everything electronically but moving documents physically which makes it just quasi E-tax, let the Ministry of Finance, Planning and Economic development confirm to URA that it is no longer necessary for tax payers to print, sign and return hard copies to the tax offices," Kaddu said.

The URA public relations office says Parliament approved the Electronic Signatures Act 2010 but the president has not assented to it so as to make it a law. The officials say until the president assents to the Act, paper documents will continue to move around.

When the Act is passed, should one declare wrongly, one would face a fine. Kaddu says it is fine as long as the system will run smoothly and eliminate the physical movement of hard copy documents.

Despite the hitches, Kaddu says traders are happy with URA for rolling out the system despite its flaws. "It is a good step to move towards E-tax because it makes it easier and quicker to access information. It also saves time and the cost of queuing at URA offices."

Hellen Nabukwasi, an administration assistant of DMT Consultants, has only praises for the system. "Before E-tax was rolled out in 2009, URA would give us books to file tax returns but now you can just go online and file them at any time. You do not have to wait for the 15th of the month to submit the forms," Nabukwasi says.

She advises other e-Tax users to file their tax returns or transactions early or else bear with a jammed network.

Kaddu says there is need to train and equip URA staff so that the 24/7 system is not watered down by the hitches users encounter. He adds that URA must also think about scrapping fines that arise from delays in the E-tax system. "Innocent traders are the ones who suffer," he says.

However, Banage is optimistic that the hitches are teething problems, which they will continue to iron out in the process of continuous improvement.

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