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ATAF lauds Uganda’s tax reforms

By Joan Akello

African Tax Administration Forum (ATAF) officials say Uganda has made strides in using the mobile phone tax payment to increase compliance. They say the South African Revenue Service is weighing its options on the move.

“Uganda’s cell phone tax payment is great … with a great Commissioner General,” Elizabeth Storbeck of the ATAF Secretariat said, “ Africa has more cell phones than anywhere else in the world.”

As of Oct. 28 2013, there are only 279,689 registered taxpayers supporting Uganda’s estimated population of 36 million people. There are about 15 million mobile telephone subscribers which constitute about 42 percent of the population. According to the 2011 Census, 89% of South Africans have cell phones.

Thulani Shongwe, Head Multilateral Cooperation at ATAF says Uganda just like most African countries faces challenges of a narrow tax base and large informal sector that is not taxed. He says there is need to develop the capacity and capability of the tax collectors to introduce new taxes, use a service oriented approach and a three point compliance model. This model includes information, service and enforcement.

“The easier you make it for people to pay taxes, the easier for them to comply,” Thulani told a group of African journalists. The mobile phone tax payment is one of those ways to simply tax payment.

URA’s Public and Corporate Affairs unit in a recent press report said this platform will collect between Shs10—20billion every month and an average of more Shs100billion per year.

The tax man is also encouraging 24-hour self-service through the web-portal, translating tax literature in at least eight local languages, educating the public of their rights and obligations and having mobile tax hubs to provide help and support to the business community in a bid to make compliance easier.

In August 2013, URA’s net revenue collections were Shs 633.93Bn against a target of UGX 607.67Bn, posting a surplus of Shs 26.26 Bn. This was an increase by 22.82% and 23% from Shs 545. 89Billion and Shs 485.32 billion in 2012 and 2011 respectively.

Uganda however is still struggling to up its revenue to GDP ratio that has stagnated at 13.1 percent for the last three years. The ratio of tax revenue to Gross Domestic Product in Uganda is one of the lowest in the East African region standing at less than 14% of GDP estimated at US $50.59 billion (2012),$48.56 billion (2011) and $46.2 billion (2010).

South and East Africa Trade and Negotiations Institute (SEATINI), a trade NGO, attributes a slow growth in tax revenue in Uganda as a percentage of GDP chiefly from fiscal corruption, exacerbated by high levels of tax incentives and overdependence on a small number of sources of tax revenue.

The tax revenue to GDP ratio declined from about 13% in 1970 to 6% in 1979. It is currently 13.1% which is lower than the average of 20% for Sub-Saharan Africa, and way below the 30% average for advanced industrial economies despite a more stable political and economic environment. The importance of GDP lies in the fact that it forms the base on which taxes are imposed, and the performance of a tax system depends on the proportion of GDP realized as tax revenue.

Uganda lacks national identification system, something Storbeck says URA should embark on by giving all citizens tax identification numbers at birth.

This problem is partly overlapping with the lack of transparency and information management. URA is partnering with local governments, ministries, departments and agencies (MDAs), security agencies and other business and professional associations to tap into the informal sector. In this, they are riding on each other’s strength to widen the tax base.

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