Uganda Revenue Authority (URA) has opened its revenue collection account for the financial year 2020/2021 with a surplus of about Shs278billion, according to a statement issued by the tax body.
This development renders some sort of relief to the top tax collector leadership sitting at the 22-storeyed skyscraper at Nakawa in Kampala, considering that the tax prefect closed its 2019/20 revenue collection calendar with a deficit of about Shs3 trillion, due to Covid-19 impact.
The Shs3 trillion deficit recorded in the previous financial year, which is an equivalent of the total debt government owes local suppliers, so far is the biggest revenue shortfall ever registered in nearly 30 years since URA embarked on the journey to modernize tax administration.
When contacted, the URA's manager public and corporate affairs, Mr Ian Rumanyika, attributed the surplus revenue registered in the month of July, which is nearly three times an equivalent of the allocated budget for the ministry of trade, industry and cooperative, to among other things; the rolling out of digital tax stamps (DTS) whose purpose is to deter under-declaration at production and importation levels.
Digital tax stamps also ensure that goods on the market meet the required health and safety standards, although manufacturers are opposed to it, saying it increases the cost of doing business. And for that they want the government to take up the cost of implementing it or else postpone its enforcement until such a time that the effect of COVID-19 pandemic on businesses is under control.
According to a short statement provided to the Daily Monitor by URA, net revenue collection for the month of July 2020 totalled to slightly more than Shs1.2trillion against a target of slightly more than Shs923.3billion, with a net surplus of a little more than Shs278 billion
"The cumulative net surplus as of July 31, 2020 was Shs278 billion," notes the URA statement.
According to Mr Rumanyika, strategic and efficient internal administrative measures, uptake of new systems like DTS and Electronic Fiscal Receipting and Invoicing Solution (EFRIS), which is an e-receipting and invoicing system to address challenges such as suppression of sales, non-issuance of tax receipts or invoices explains the revenue surplus registered in the month of July.
This particular system (EFRIS), believed to be a more efficient method of revenue mobilisation is also useful in curbing false refund claims, fictitious purchases with no physical movement of goods, and unverifiable claims by taxpayers due to loss of records.
The performance of the surplus registered according to Mr Rumanyika was also a result of recovering economy following months of battering from the COVID-19 pandemic and its subsequent containment measures. This is in addition to voluntary disclosure and offer of amnesty to defaulting taxpayers.
Tax heads performance
Meanwhile, gross collections from domestic taxes in the first month of the revenue collection calendar amounted to Shs732 billion against a target of Shs574 billion, registering a surplus of Shs158. 6billion.
Taxes under direct domestic taxes such as PAYE, Corporation Tax, Individual income tax, withholding tax, and Rental income tax, performed at 134.85 per cent with a surplus of Shs90.8billion.
And indirect domestic taxes performed at 135.7 per cent, registering a surplus of Shs85.6 billion. Non Tax Revenue Collections performed at 111 per cent which is a surplus of 4.7billion whereas appropriation in aid performed at 32 per cent, recording a deficit of Shs22.6 billion.
International trade taxes performed at 130 per cent with gross collections of Shs499.7billion 6 against a target of Shs382.6billion.
This financial year's revenue target is Shs21.8trillion, with tax revenue amounting to Shs20.2 billion and non-tax revenue of Shs1.5billion.
This target translates into a revenue effort of 14.3 percent of GDP.