Despite the challenges posed to the country’s economy due to the outbreak of the Coronavirus (COVID-19), the new Uganda Revenue Authority (URA) Commissioner-General John Rujoki Musinguzi, has announced that the tax body collected a surplus of Shs632Bn during the period of lockdown.
It should be noted that the COVID-19 lockdown that was announced by President Yoweri Museveni in March this year to curb the spread of the pandemic adversely impacted on the finances of all business enterprises in the country because they had to close down, thereby making it difficult for their proprietors to meet their tax obligations.
However, John Rujoki Musinguzi contends that amidst the COVID-19 challenges, URA has managed to end the old Financial Year (2019-2020) and start a new one (2020-2021) with a surplus of Shs632Bn revenue collected by URA.
It should be noted that as a result of the COVID-19 lockdown, not only were businesses affected but the traveling of passengers and freight of goods was also interrupted, yet these are key avenues for revenue collection and as a result, many revenue authorities around the world failed to hit their targets, although URA wasn’t among them.
Musinguzi started his tenure at URA on April 2, 2020, after being appointed to head the tax body by President Yoweri Museveni on March 29, 2020, to replace Doris Akol.
Although there was speculation that he would start his reign on a bad note following the allegations of corruption and rot among some URA officials, Musinguzi not only managed to weed out the ‘Kawukumi’ (weevils) at URA but has since revamped the entity into one of the best performing government authorities.
Figures in the 2020/21 National Budget indicate that URA was charged with collecting tax revenue amounting to Shs21.81 trillion, out of which tax revenue was Shs20.219 trillion and non-tax revenue of Shs1.591 trillion.
According to John Rujoki Musinguzi, URA has so far registered a good start, because gross revenue collection for the month of July 2020 totaled to Shs1,232,459,820,462 against a target of Shs956,765,996,314, thereby registering a gross surplus of Shs275,693,824,148.
We have established that figures from URA indicate that, Net revenue collection for the month of July 2020 totaled to Shs1,201,515,213,922 against a target of UGX 923,359,628,254, thus a net surplus of Shs278,155,585,668.
That means that the cumulative net surplus revenue as at 31st July 2020 was Shs278,155,585,668, which is a very promising start for Musinguzi and his team at URA.
The Gross collections from Domestic Taxes according to the URA figure totaled to Shs732,695,723,301 surpassing the targeted Shs574,085,860,341, hence a surplus of Shs158,609,862,960.
Speaking about this timely achievement, Ian Rumanyika, the Manager Public and Corporate Affairs at URA said that; “Direct Domestic Taxes which include (Pay As You Earn) PAYE, Corporation Tax, Individual income tax, withholding tax and Rental income tax performed at 134.85%, with a surplus of Shs90,896,386,480, while Indirect domestic taxes performed at 135.71% registering a surplus of Shs85,648,445,453. Non-Tax Revenue Collections performed at 111.88%, a surplus of Shs4,728,416,376, whereas Appropriation in Aid performed at 32.64% registering a deficit of Shs22,663,385,349.
He added that; “International trade taxes performed at 130.60% with gross collections of Shs499,764,097,161 against a target of Shs382,680,135,974,” which is a great performance.
Rumanyika also revealed that URA figures for August indicate a total of Shs1,415,180,237,848 as Gross revenue collected, against the targeted Shs1,059,229,633,555, hence the Authority registered a gross surplus of Shs355,950,604,293, despite the COVID-19 challenges.
According to URA figures, the Net revenue collection for August 2020 amounts to Shs1,379,488,791,307, surpassing their target of Shs1,025,823,265,495, thus a net surplus of Shs353,665,525,812.
As at 31st August 2020, the cumulative net surplus was UGX 632,134,197,145, which heralds a great future for the tax body with Musinguzi at its helm .
Rumanyika revealed that Gross collections from Domestic Taxes were Shs802,038,422,691, surpassing the targeted Shs637,502,690,313, hence a surplus of Shs164,535,732,378, whereas Direct Domestic Taxes (PAYE, Corporation Tax, Individual income tax, withholding tax and Rental income tax) performed at 135.61%, resulting into a surplus of Shs97,392,905,168.
On the other hand, Indirect Domestic taxes performed at 138.75%, thus registering a surplus of Shs101,775,170,916, according to Rumanyika.
He noted that Non Tax Revenue Collections performed at 115.91%, hence a surplus of Shs6,934,282,886 while Appropriation in Aid performed at 28.07%, resulting into deficit of Shs41,566,626,593, whereas International trade taxes performed at 145.39% , with gross collections of Shs613,141,815,157, surpassing the targeted UGX 421,726,943,242, which is commendable performance.
Strategies to Boost Tax Collection
In a bid to mitigate the challenges brought about by COVID-19 to business owners so as to encourage them to pay taxes, URA recently came up with strategies aimed at maximizing tax revenue collections.
One of them is the Electronic Fiscal Receipting and Invoicing Solution (EFRIS) which was rolled out on July 1, 2020, aimed at providing Electronic Tax solutions to all clients and ease payment of revenue at all collection centers.
Digital Tax Stamps
This is another innovation that was introduced to digitize tax collection and to reduce cases of tax evasion. URA officials contend that ever since Digital Tax Stamps were introduced they have helped to increase revenue collections.
However, besides the Electronic Tax solutions and Digital Tax Stamps, URA recently announced 10 business continuity measures to help taxpayers keep in business amidst the COVID-19 challenges and be able to meet their tax obligations without having to bleed their investments dry.
It should be noted that in his remarks during the 2nd day of the Post Budget Reading conference held in June, Musinguzi noted that URA had identified areas that needed reforming if the Authority was to hit its revenue collection targets.
Musinguzi said; “These are unprecedented times; the Coronavirus pandemic has rapidly changed the way we operate, and we must adapt accordingly. We can no longer rely only on international trade and foreign assistance; we need to look within us as a country for sustenance.”
“We are going to be more inward-looking. We are going to focus on domestic tax collection instead of paying all attention to international/foreign sources,” he added, noting that URA will base more on data and improve the processes for managing data collected from the field so as to guide them along the path to achieving their goals.
Musinguzi explained that; “We are going to clean it to be accurate and use scientific processes to point out areas of focus. We will not look on and be part of the causes of young businesses in our country to collapse because of over-taxation.”
He went on to reveal that “We would be defeating our own purpose of existence if we cause small businesses to collapse because we need them to grow bigger with incomes which we can tax later.”
Musinguzi also revealed that on top of their targets for domestic revenue collection is tax education to improve tax compliance, which will help them to sensitize all owners of businesses about their obligations to pay taxes and what exact type of taxes they have to pay.
Commenting about the recent massive shakeup at URA which saw some senior managers and commissioners resign, Musinguzi explained that the move was aimed at giving an opportunity to a team of competent and dedicated Ugandans to serve their country diligently.
“It’s not that the institution is corrupt. I found a very competent team. It’s just a few apples that spoil the reputation of many,” Musinguzi explained.
He added: “There are a number of systematic measures URA is introducing to curb corruption within the Authority. Some of them include lifestyle audits where staff will have to account for what they earn and how they live.”
One of the measures, Musinguzi revealed, is the Domestic Revenue Mobilization strategy which the Government launched recently and is expected to propel Uganda closer to attaining its target of 16% tax to GDP ratio by 2040.