Uganda: URA Registers Growth but Falls Behind Targeted Revenue

Despite registering a deficit of Shs2.3 trillion, Uganda Revenue Authority (URA) collected more taxes in the just concluded financial year compare to the 2019/20 financial year.

According to the URA revenue performance report for the period ended June 21, revenue grew by 1 per cent or Shs2.5 trillion, the highest in four years.

While presenting the 2020/21 revenue performance report last week, URA Commissioner General John Musinguzi, said despite the growth in revenue, they were behind target due to Covid-19 induced measures, which slowed the economy and constrained business.

"In the 2020/21 financial year, URA collected net revenue of Shs19. 2 trillion posting an estimated tax to gross domestic product ratio of 12 per cent," he said, noting that it should, however, be noted that the outturn of the 2020/21 financial year was lower than the targeted Shs21.6trillion.

Government had given URA a targeted of Shs21.6 trillion with the need to progressively improve tax to gross domestic product ratio to 15 per cent. However, Covid-19 disrupted the target eating into both domestic and international tax revenue streams.

For instance, during the period, Pay As You Earn, which is one of the major tax heads, registered a shortfall of more than Shs315b, mainly because of a scale down in employee numbers by a some organisations due to a slowdown in operations and cash flow.

Corporate tax collections were also below target by more than Shs239b due to losses registered in key sectors of the economy, worsened by non-compliance and poor debt enforcement.

However, growth was registered in a number of segments such as debt recovery, whose recoveries yielded about Shs1 trillion attributed to a number of factors among which included easing of alternative dispute measures that contributed more than Shs365b, while voluntary disclosure initiative also made a significant contribution.

The growth was also attributed to the implementation of a number tax compliance solutions such as digital tracking solutions and Electronic Fiscal Receipting Solution.

The report also indicates that faster clearance, introduction of a bonded warehouse information management system, easing of TIN application, automation of Withholding Tax exemption and Tax Clearance Certificate issuance, contributed to the revenue growth despite the deficit registered.

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