Uganda: Revenue Below Target Second Year in a Row

The Uganda Revenue Authority has registered a second successive revenue collection shortfall, raising concerns about the health of the economy.

Latest figures show the taxman collected net revenues of Ush9,042.01 billion ($2.4 billion) between July and December 2019 against a target of Ush9, 739.39 billion ($2.6 billion).

This reflects a revenue deficit of Ush697.38 billion ($188 million), a figure higher than the record collection deficit of roughly Ush660 billion ($178 million) registered in the financial year 2017/18.

This deficit could signal increased government borrowing or big spending cuts in operations to balance official expenditure with diminished revenues.

"The current tax revenue targets were anchored on rebased GDP numbers but have turned out too high for our circumstances. The closure of the Uganda-Rwanda border at Katuna for almost a year has hurt many manufacturers while high energy costs have complicated matters for them," argued Jet Tusabe, tax director at audit and accountancy firm BDO Uganda Ltd.

URA blames the revenue shortfall on low production levels, falling consumer demand and weak economic conditions evident in the manufacturing, telecommunications and in the trade and commerce sectors during the first six months of 2019/2020.

Value added tax was the worst hit segment. This tax accounts for nearly 40 per cent of the country's revenues while corporation tax contributes around 35 per cent.

While VAT returns from phone talk time sales realised a shortfall of Ush92.02 billion ($24.9 million) between July and December 2019, sugar sales suffered a deficit of Ush38.27 billion ($10.3 million) while beer products posted a VAT shortfall of Ush28.62 billion ($7.2 million), URA data shows.

The wholesale and retail trade posted a VAT deficit of Ush41.32 billion ($11.2 million) between July and December 2019. In contrast, one off gains realised from capital gains tax levied on sale of shares by investors in certain companies amounted to Ush195.35 billion ($52.8 million), a figure that helped offset bigger shortfalls.

Overall private sector credit grew by 12.1 per cent during the quarter that ended December 2019 compared with 13.3 per cent growth registered the previous quarter, Bank of Uganda data shows.

See What Everyone is Watching

More From: East African

Don't Miss

AllAfrica publishes around 800 reports a day from more than 140 news organizations and over 500 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.