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URA’s nine-month tax collection hit Shs15.4tn

URA headquarters at Nakawa

Finance ministry expects the tax agency to collect Shs22.3trillion in FY2021/22

Kampala, Uganda | JULIUS BUSINGE | Total tax collections for the nine months of FY2021/22 increased by Shs 1.4 trillion to Shs 15.4trillion compared to the same period last financial year, but fell short of the Shs16.5trillion target.

The taxman agency said its domestic revenue collections stood at Shs9.4tn against a target of Shs10.6tn. However, this represented a growth of Shs816bn (9.42%) as compared to the same period in FY2020/21.

Major surpluses were registered in PAYE (Shs248bn), casino tax (14.70bn) and tax on bank interest (2bn). Shortfalls were mainly incurred in corporate tax (Shs200bn), withholding (Shs142bn), rental tax (Shs120bn), and treasury bills (Shs45bn) majorly due to COVID 19 restrictions that led to supply chain disruptions, low aggregate demand in the economy and thus reduced profitability.

PAYE contributed the most to direct domestic taxes collections registering a growth of 15.50%, followed by corporation tax.

The indirect tax collections for the period July to March were Shs3.6tn. A growth of Shs341bn (10.48%) was realised compared to the same period in the FY 2020/21. At tax head level, VAT collections stood at Shs2.3tn, registering a shortfall of Shs504bn and a performance of 82.59%. A growth of Shs224bn (10%) was realized.

The URA also witnessed under performance in the construction sector by Shs74bn, beer Shs49bn, spirits/waragi Shs48bn, soft drinks Shs43bn and real estate activities Shs43bn.

However, the tax authority registered a major surplus in phone talk time at Shs43bn. The local excise duty collections were Shs1.2tn registering a shortfall of Shs210bn, a performance of 85% and a growth of Shs117bn (10%). It however, witnessed shortfalls in beer by Shs50bn, spirits by Shs52bn and internet data by Shs35bn.

The URA registered surpluses in levy on mobile money withdrawals by Shs30bn, mobile money transfers Shs8bn and sugar Shs7bn.

The Non-Tax Revenue collections (i.e levies on driving licences and others) were Shs974bn against a target of Shs1.1tn, posting a shortfall of Shs167bn and a performance of 85%.

International tax collections

International trade tax collections for the period July to March 2022 were Shs6.2tn against a target of Shs6.1tn, posting a surplus of Shs64bn, and a performance of 101%.

Customs tax collections grew by Shs686bn (12%) in July to March of FY2021/22, in comparison to the same period last year. The performance was mainly attributed to growth in vatable goods by 13% (Shs1.4tn) in the period July to March 2022 compared to the same period last year.

The top five sectors during the reporting period were wholesale and retail, manufacturing, financial activities, information and communication and public administration and defense; and they generated 74% of the total revenue.

During the period of July to March of the FY 2021/22, a total of 538,275 new taxpayers were added to the taxpayer register to end the period at 2,321,828.

John Rujoki Musinguzi, commissioner general at Uganda Revenue Authority said on May 9 that revenue agency has to collect an additional Shs5.9 trillion.

“We are optimistic that we shall meet this target,” he said.

However, tax experts including Henry Bazira, a member of the ‘The Tax Justice Alliance Uganda’ said, URA’s future performance has a direct correlation with government’s tax policy agenda.

He said, unnecessary incentives to investors must be stopped to enable the country register more tax revenues and support service delivery.

He also urged the government to walk the talk on compiling the cost-benefit analysis reports on tax incentives before they are offered to “the so-called foreign investors.”

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