UGANDA, Kampala | Real Muloodi News | With the close of the financial year, Uganda Revenue Authority (URA) declared they collected more taxes in 2020/2021 than the previous year. URA’s revenue performance report (June 21) showed revenue grew by 14.9%, reportedly the highest in the last four years. In total, URA registered collections of Shs 19.2 trillion. However, they still fell short of targets, with a revenue shortfall of Shs 2.4 trillion.
While delivering URA’s 2020/21 revenue performance, Commissioner General John Musinguzi explained they did not meet the government’s target because of the COVID-19 pandemic and its restrictions. The government had set an ambitious target of Shs 21.6 trillion for URA to improve the tax to gross domestic product ratio, which currently stands at 12.9 per cent.
“Despite the pandemic this financial year, we were able to grow the revenue collection and this is a commendable job,” he said during the media brief at URA Head Office in Kampala.
The URA revenue shortfall comes as a blow to Uganda, as debt nears USh 66 trillion, up from Shs 49.0 trillion in December 2019. Ministry of Finance expects public debt to GDP to rise to a dangerous 51.9% in the 2021/22 financial year.
Key Highlights from The Report:
- During the pandemic period, Pay As You Earn (PAYE) saw a reduction of more than Shs 315 billion, as employees were let go by some organisations due to a slow down operations, and a drop in cash flow.
- Corporate taxes likewise saw a reduction as businesses encountered losses. Corporate tax collections were below the target by over Shs 239 billion, which was further impaired by non-compliance.
- Rental Income Tax was also down compared to last year, from Shs 103.7 billion, to Shs 102.2 billion, a reflection of the drop in rental income earned by landlords following pandemic related closures.
- Growth was recorded in debt recovery, which collected approximately Shs 1 trillion. Alternative dispute measures and voluntary disclosure initiatives played a significant role in the collections.
- Growth in tax collections was also recorded due to the implementation of new tax compliance measures such as technology and the Electronic Fiscal Receipting and Invoicing Solution (EFRIS). EFRIS is an initiative under the Domestic Revenue Mobilization System (DRMS) that seeks to solve tax-related challenges encountered by business transactions and the issuance of receipts.
- Other factors that contributed to the growth of tax collections include:
- Faster clearance
- Bonded Warehouse Information Management System
- New and improved digital TIN application system
- Automation of Withholding Tax exemption and Tax Clearance Certificates
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