UGANDA, Kampala| Real Muloodi News | In recent years, there has been an increase in the number of tax disputes in Uganda. This can be attributed to several factors, including URA’s push to widen the tax base and raise revenues, a lack of understanding about taxpayer obligations exacerbated by continual amendments to tax laws, poor record keeping by tax payers, and general economic hardships, particularly in the wake of COVID-19.
A tax dispute arises where there is disagreement between the tax payer and URA on the tax payable. Traditionally, the courts of law have been the most commonly used approach to dispute resolution. However, this system is time consuming which leads to case backlogs, costly which eats into government revenues, and it affects stakeholder relationships which inhibits voluntary tax compliance.
Therefore, the URA has pledged to be more listening and to communicate with default tax payers, in a bid to peacefully settle tax disputes through the alternative dispute resolution process.
URA Commissioner General, John Rujoki Musinguzi, said that URA will never again close any tax payers’ business before listening to their side of the story. He made the statement during his speech at an event held by the Rotary Club of Muyenga for the installation of Agustus Nuwagaba as the 34th President of the Club.
“For us to accommodate the environment of listening and learning from one another, we have reset ourselves as an organisation that will be more listening. There will never be high handedness again, closure of your businesses; we will first listen to you, and explain to you our point of view until we agree to walk together,” he said.
Mr Musinguzi further pledged that URA will never again take any default tax payers to Court before engaging them to reach a win-win solution.
“At URA, we are saying, instead of getting our tax payers into Court, and spend money on lawyers, we can engage with one another through what we call alternative dispute resolution, and we can settle our tax disputes. And if we have any mistakes in our assessments, we will vacate them and we will apologise,” he said.
Mr Musinguzi’s comments come at a time when URA has begun investigations into non-compliant taxpayers with the aid of technology such as the Rental Tax Compliance System (rTCS). As a result of the system, URA is raising default assessments against landlords who in many cases have never paid any rental income tax before now.
The Domestic Tax Laws of Uganda accord you -the taxpayer,the opportunity to assess your tax obligation by way of filing a return with URA periodically.
It is when you fail to file a return that a default assessment is issued to you by URA.
— Uganda Revenue Authority (@URAuganda) December 20, 2021
Mr Musinguzi said the Authority is also promoting “voluntary disclosure” for anyone who has not been tax compliant. Instead of waiting for the auditors to discover and penalise him/her, the tax payer can voluntarily disclose the tax liability to prevent any penalties.
“The law has empowered me to waive off that penalty and interest and you just pay the primary tax,” he said.
Meanwhile, Mr Musinguzi challenged Rotarians to understand the purpose of revenue collection, saying that Uganda cannot grow and deliver services unless it’s citizens pay their fair share of taxes.
“This revenue that we collect is for the primary purpose of causing development of our country, of providing services like the hospitals, building roads, building of schools and many other things that Government does. But how are we doing on that mission of collecting revenue? As you may all know, one of the parameters of measuring our revenue collection efficiency is what we refer to as tax to GDP ratio. Our tax to GDP ratio stands at 13%,” he said.
Mr Musinguzi’s speech coincides with Ministry of Finance’s monthly report announcing that Government in the month of November registered a revenue shortfall of USh 52.18 billion against its target for the month.
URA was targeted to collect USh 1.74 trillion in November 2021, but domestic revenue collections for the month amounted to USh 1.688 trillion, hence the shortfall.
The lower than anticipated revenues means that government operations in November 2021 have resulted in an overall fiscal deficit of USh 724.46 billion, which was higher than the planned deficit of USh 654 billion.
This puts even more pressure on URA to push harder to widen the tax base and raise tax assessments, and go after those taxpayers who are non-compliant.
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