UGANDA, Kampala | Real Muloodi News | In a striking turn of events, Uganda’s Ministry of Finance, Planning, and Economic Development (MoFPED) unveiled its December 2023 economic performance report on January 17, revealing a notable outperformance in rental income tax amidst an overall domestic revenue shortfall.
The report highlights record-breaking rental income tax revenues, surpassing its monthly target by USh 10.61 billion and marking a historic revenue of over USh 101 billion for the quarter – a significant quarterly increase of USh 30.77 billion compared to the same period last year.
The impressive results in rental income tax come at a time when the majority of Uganda’s domestic revenue streams are faltering.
According to the MoFPED report, total domestic revenue collections in December 2023 amounted to USh 3,059.35 billion, falling short of the target by USh 394.60 billion, representing an 11.4% deficit. This shortfall was evident across both tax and non-tax revenues, with almost all major tax categories registering deficits.
Taxes on international trade transactions faced the most considerable shortfall, amounting to USh 226.67 billion below the December target. This underperformance is attributed to lower-than-projected imports, affecting import duty, excise duty, VAT on imports, and infrastructure levy.
Indirect domestic taxes, including VAT and excise duty, also fell short by USh 104.58 billion, partly due to tax administration challenges.
Direct domestic tax collections were not spared, missing their target of USh 1,661.80 billion by USh 23.11 billion. While surpluses were noted in PAYE, corporation tax, and rental income tax, these were offset by a significant shortfall in withholding tax, which was short by USh 81.84 billion.
The stellar performance of the rental income tax is largely credited to the Uganda Revenue Authority’s (URA) Rental Tax Compliance System, implemented in April 2022. This system has played a crucial role in enhancing compliance and efficiency in rental tax collection, leading to consecutive record-breaking revenues since its inception.
According to Sarah Chelangat Muzungyo, the Commissioner of Domestic Taxes, the Rental Tax Compliance System’s success is a testament to the government’s commitment to leveraging technology to improve tax administration and compliance.
“We now have a lot of automation that is supporting us in this field. We have the RippleNami tool called the Rental Tax Compliance System, which uses satellite technology to geo-map, locate, and identify properties,” she said.
rTCS identifies specific risk factors associated with tax evasions, such as discrepancies between landlord and tenant reported rent, and the number of properties identified by the system compared to the number of properties that landlords declare.
The tool then consolidates and prioritises essential information for investigations. This targeted scrutiny allows for a more efficient allocation of resources to prioritise high-risk cases.
URA has indicated rental income will remain a priority area of focus in the months to come. In a bid to sustain and further enhance the impressive gains in rental income tax revenues, the URA has issued a comprehensive tax compliance notice, set to take effect from Monday, January 22, 2024.
The notice emphasises the enforcement of compliance with EFRIS (Electronic Fiscal Receipting and Invoicing System), DTS (Digital Tax Stamps), and rental tax obligations across Uganda.
READ MORE LIKE THIS:
Uganda’s Rental Income Tax Outperforms as URA Intensifies Nationwide Tax Compliance
VIDEO: URA Coming After Landlords with Intelligence Tool, Rental Tax Compliance System
