Taxes for all eligible persons is a fair compromise

By Allan Ssempebwa Kyobe

In the last eight months, Uganda Revenue Authority (URA) saw the tax register expanded with more 90,755 taxpayers.

In the same period, revenue performance hit an impressive 100.30% growth registering a surplus of sh18.09b. According to URA statistics, this represented a collection growth of 18.33% when one chooses to compare it to the same period last financial year.
 
At the whole, the tax register stood at a total of 723,134 individual and non-individual taxpayers by February this year. This development nurtures hopes that growing taxes and attaining tax compliance in Uganda is an attainable dream. Having more eligible taxpayers captured on the tax net further improves appreciation of the need to ensure tax fairness in the distribution of the tax responsibility, one of the key canons of taxation.

It is exceptionally unfair when an individual or business entity decides not to file returns or pay their due tax liability shifting the obligation to only a few. This breeds unnecessary competition and unfairness in the market ultimately upsetting commodity prices since those dodging taxes will most likely price their commodities much cheaply than their tax compliant associates.

A law abiding nation is not in the business of abetting this irregularity. This is why there have been intensive efforts by the URA to have every eligible taxpayer getting on board and paying their taxes on time as required by the laws of taxation in Uganda.
 
With a wide and ever increasing informal sector holding back tax collection levels, the tax body is increasingly tasking small businesses to register and participate in the civil obligation of paying tax.

This direction is not only vital in growing the tax register curve but also allows rapid business growth as it hinges the firms on the mandatory statutory regulations guaranteeing business of security before the law and a greater advantage in attracting more clients.
 
Much as the habit of staying at large and undetected for taxes is a seemingly attractive practice to some traders, enabling them to dodge taxes, the benefits of registration are more enormous when compared non-registration. For instance, staying informal even keeps small businesses away from expansion opportunities as the cost of dealing with established and formal commerce is much lower.

This pushes client preference to formal commerce leaving the informal businesses limping. Much more important to note is that by eluding taxes, an economy may suffer a resources allocation imbalance where fewer individuals contribute to the resource envelope but expect exceeding crucial services from the government.
 
Efforts are now exerted at keeping the registration process even more convenient and achievable at a lower cost to allow formalization of unregistered business. URA’s integrated electronic system (e-tax), a platform which allows eligible taxpayers to register and get a Tax Identification Number (TIN) is so far a notable registration avenue.
 
With the Taxpayer Register Expansion Project (TREP) initiative, introduced in February 2014, even the unwilling yet eligible have now been brought to the taxation pool.

This platform has collaborating government agencies including Kampala Capital City Authority (KCCA) and Uganda Registration Services Bureau (URSB) exchanging both technical and moral capacity in formalizing businesses. As of February 2015, one year later, the initiative had brought on board over 60,000 taxpayers to the tax net. The exercise has since spread out to greater Kampala areas of Wakiso, Mukono, Entebbe and also extending out to other urban authorities countrywide.
 
The TREP framework enables business formalization under one roof which allows business registration from URSB, a tax registration from URA and application for a trading license from KCCA, a noticeably seamless process. This is now a tested arrangement with capacity to achieve taxation for all and ultimately motivate other businesses to register for tax.
 
The South African Revenue Service (SARS) SARS equally uses state agencies and municipalities to cast the tax net even further and identify eligible taxpayers for tax purposes.

Kenya, Tanzania and Rwanda adopted the Block Management System, a compliance management mechanism that follows up non-filers and payers and supports them in meeting their tax obligations.
 
URA is continuously engaging in strategic discussions with several other government ministries, agencies and departments to establish mechanisms of expanding the tax base and also increase voluntary compliance through service management functions. This suggests that a number of economic activities that are still outside the tax net will be tapped, and the existing low Tax-to-GDP ratio now standing at 11.7% (on recent rebasing) improved.
 
URA remains committed to its mission of providing excellent revenue services with purpose and passion. Our strong conviction is that this can only be done with everyone’s involvement in developing Uganda.

The writer at the public and corporate affairs division at the Commissioner General’s Office of the Uganda Revenue Authority.