Why we should all embrace EFRIS as a new normal

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OPINION

By John Kenneth Okanya

In an era where digital transformation is reshaping every aspect of life, the Uganda Revenue Authority (URA) has naturally adapted to these changes.

Among its various innovations, one particularly notable initiative is the Electronic Fiscal Receipting and Invoicing Solution (EFRIS), launched in 2020.

The solution aims to ensure accurate and real-time recording of business transactions, thereby improving efficiency in tax administration, with a vision of ultimately moving domestic revenue mobilisation from the current 13% of GDP to a more sustainable 20% of GDP by 2040.

URA estimates that the government loses approximately Ugx. 4 trillion annually in potential tax revenue due to inadequate monitoring of business transactions in the economy, hence the need to streamline recording and storage of transactional data.

EFRIS helps to achieve this and also further mitigates the risk of losing physical tax invoices and transactional data through digitally storing the information on a central server.

Despite its benefits, EFRIS has encountered pushback, peaking in 2024 after Traders organised strikes in response to increased enforcement actions by URA, which included hefty penalties of six million shillings for each violation.

This resistance was further compounded by a lack of awareness. Many small and medium Enterprises (SMEs), were unfamiliar with how the system operates, and some even perceived it as a new tax on their businesses.

Technical hurdles also posed challenges, including insufficient access to computers and compatible devices, issues with software integration, and device costs.

In light of these challenges, URA in April 2024 suspended enforcement and imposition of penalties for non-issuance of EFRIS invoices and even waived penalties that had been issued, especially to small businesses.

It changed its approach and embarked on a massive awareness creation campaign before enforcement, which included setting up an office in downtown Kampala’s Kikuubo area to support traders in complying with the new system.

In order to ease access, URA has also created several platforms through which EFRIS can be used. These include URA’s web portal(website), the EFRIS app; which can be used on a smartphone, system-to-system connection; which is a direct link to a business’ accounting or sales system, as well as the use of an Electronic Fiscal Device (EFD); which is a portable device similar to a point-of-sale machine (POS).

In this financial year 2025/2026, the EFRIS penalty regime was revised and made more manageable, but compulsory usage was expanded beyond VAT-registered Taxpayers to 12 sectors listed in public notice No. 2218 of 2025.

These changes show that the government is determined to move forward with the implementation of EFRIS but is also committed to improving its administration by ironing out any sticky issues that may exist.

The penalty structure for failing to issue EFRIS invoices shifted from a fixed amount per violation to a proportional regime whereby VAT-registered taxpayers will incur penalties amounting to double the tax owed on the particular transaction(invoice).

For instance, if an invoice totals 1,180,000 with VAT being 180,000, then the penalty will be set at 360,000 instead of the previous fixed amount of 6,000,000, no matter the invoice value.

Also effective July 2025, the Government expanded the scope of compulsory EFRIS usage to persons in wholesale and retail of fuel; mining and quarrying; manufacturing; electricity, gas, steam and air conditioning supply; water supply, sewerage, waste management and remediation activities; construction; transportation and storage; accommodation and food services activities; information technology and communication; real estate activities; professional, scientific and technical activities; and arts, entertainment and recreation.

This means that individuals such as a Landlord (real estate activities) in Soroti, a restaurant owner (food services) in Fort Portal or a Technician running an air conditioning workshop in Arua, among others, have to put measures in place to fit within the new EFRIS guidelines to remain compliant with the Taxman.

With these changes, Uganda is following in the footsteps of peers in the region, like Kenya, where, in September 2023, the Electronic Tax Invoice Management System (e-TIMS) became compulsory for all businesses irrespective of their VAT registration status.

This continued emphasis on EFRIS usage means that established compliant businesses, such as multinationals, may prefer to deal with other compliant businesses to avoid getting into trouble with the Taxman.

In doing so, they will reduce the possibility of being denied the right to claim an expense from services consumed in the above-mentioned sectors due to lack of an e-invoice or receipt while filing their annual income tax returns.

In a country like Uganda, where informal trade is prevalent and compliance issues are glaring, EFRIS represents a significant advancement.

It also properly aligns with Uganda’s Digital Transformation Roadmap as envisaged in the National Development Plan IV (NDP IV). URA and the policy makers at the Ministry of Finance, Planning, and Economic Development should continue simplifying onboarding and offering incentives to EFRIS-compliant businesses.  

It is also necessary to acknowledge that many issues raised during the Trader protests in 2024 persist today, necessitating a balanced approach between enforcement of the law and trade facilitation, ensuring that the goose (Taxpayers) that lays the golden egg(taxes) is nurtured. 

To the business community, EFRIS is not your enemy but your ally in building sustainable businesses. Look at EFRIS not as a temporary disruption but as a new normal. The sooner we embrace it, the faster we unlock its benefits.

The writer is a Master of Business Administration Student, Makerere University Business School.