Uganda has an estimated 45 million people, but with a tax base of less than two million taxpayers. According to the Uganda Revenue Authority (URA), the country runs a tax register of just 1.7 million people.

The tax body now says that a new digital system dubbed ‘Electronic Fiscal Receipting and Invoicing Solution’ (EFRIS) will assist the entity trace tax evaders.

The system is used to record business transactions and the information is shared with URA in real time.

EFRIS is an initiative under the Domestic Revenue Mobilisation Programme whose aim is to address the tax administration challenges relating to business transactions and issuance of receipts.

With the system, URA believes it will able to trace the unregistered suppliers transacting business with value added tax (VAT) taxpayers.

EFRIS is made mandatory for all VAT taxpayers, including all businesses with an annual turnover of sh150m and above. The entities include utility companies, supermarkets, wholesale shops, private hospitals and schools, hospitality facilities such as hotels and bars, among others.

Ian Rumanyika, the acting assistant commissioner public and corporate affairs at URA, told New Vision on Tuesday that any business that makes over sh150m a year, should sign on to the system.

“All businesses with a sh150m annual turnover, must register on EFRI. It covers businesses such as schools, farms, hospitals and any other that falls under that threshold,” he said.

According to URA statistics, a total of 37,568 entities had registered with EFRIS as of June 11, 2021. They include 762 large taxpayers, 1,391 (medium), 62 (public sector), 577 oil and gas entities and 34,776 small taxpayers.

Rumanyika explained that business that is not formalised but transacts with any of these registered with EFRIS will be traced for purpose of recovery of taxes due.

According to URA, when a transaction is made, the details are captured in the seller’s billing system or any of the invoicing options provided by URA. These are transmitted to URA in real time to generate e-receipts and e-invoices.

When the registered entity file their returns to URA, the tax agency is able to detect the tax evading company or individual.

For instance, when a private school owner files returns to URA, he is required to list all the expenses in his business. These would include suppliers for items such as food, furniture and scholastic materials.

If any of the suppliers is not registered, URA would then ask the supplier to register formally to transact with a school again. This way the supplier would be captured in the tax net.

TRACKING TAX EVADERS

“Previously with the manual systems, traders would be required to bring their invoices. But this has changed with the system,” Rumanyika explained stressing that URA will now be able to track tax evaders.

Yesterday, New Vision ran a story on how URA is using EFRIS to track landlords evading rental income tax.

The agency is now using Yaka meters to track the landlords with the help of EFRIS.

With this system, the revenue body is able to identify individuals and companies whose names were used to register for a Yaka meter, but they are not remitting any rental income tax.

The rental income tax is levied on the total amount of rent derived by a person for the year of income from the lease of immovable property (land and or buildings) in Uganda with the deduction of any expenditure incurred in respect of the property.

THE SYSTEM

The EFRIS was first piloted last year and was fully rolled out in January this year.

In accordance with the Tax Procedures Code Act 2014, a person who conducts business and is VAT-registered is required to issue an e-invoice or e-receipt for any supply or sale.

Rumanyika said those who are not VAT-registered may also voluntarily use EFRIS to issue e-receipts.

According to URA, this would help entities to maintain records in an easy, secure and retrievable digital format and validate business transactions in real time for efficient business management.