URA beats September mark, optimistic on annual target

BUSINESS   TAXES

The Uganda Revenue Authority (URA) has declared a surplus in revenue collection for the months of July and August, lifting their hopes further to possibly beating their annual collection target set by finance minister Matia Kasaija.

The taxman declared a surplus of sh278.16b collected in July and about sh353.67b collected in August, at the height of the COVID-19 pandemic that has hit the country.

Vincent Sseruma, the URA publicist, said domestic tax collections have already registered a 100% target for the first quarter which ends September, while international taxes are currently at 97% of the target.

He said this is an outcome of the emphasis put on information management and data analytics, used to identify new tax areas, and the internal re-organisation of staff to optimally exploit their skills and experience.

"We are optimistic that with this performance, it is also possible to beat our annual target because this seems to have been the hardest part of the year," Sseruma said.

In his budget speech, Kasaija assigned URA a collection target of sh21.81trillion for the 2020/21 financial year, sh20.219 trillion of which is tax revenue.

Sseruma said there has been a general growth registered in VAT collectable from international taxes, especially on products like palm oil, which registered 58% growth, motor vehicle imports, electricals and petroleum oils.

He said over the last two months, the taxman has registered 1.4% surplus from VAT on imported goods. Sseruma also said petroleum imports registered a 15% growth in VAT collectable between July and August, partly because of the easing of the lockdown.

"We have also seen that overall, there has been an increase in import duty collectable on motor vehicles, wire cables and tyres. These have registered a cumulative growth of 5%," he said.

On domestic taxes, Sseruma said URA registered notable growth in Pay As You Earn (PAYE) and a general growth in withholding tax, especially from general supplies that yielded sh12b.

He said because of the new tax amendments that revised the commission payable to insurance and advertising agents from 20% to 10%, the tax collection body registered significant growth in that area.

"Treasury bills have also registered a good yield because of the law prescribing a 10% withholding tax on long term treasury bills from the previous 20%. This means that the treasury bills were rescheduled from long-term to short-term to benefit from that rate," he said.

Other sectors that registered good performance include the telecom sector, whose talk time registered 76% growth between July and August.

He said the wholesale, retail, insurance and financial services also registered good growth in VAT, including the cement sector despite challenges in the supply of raw materials for cement production.

Smuggling

Meanwhile, the taxman has impounded goods worth over sh500m in value and sh200m in taxes at the Busia one-stop border post.

Julius Nkwasire, the assistant commissioner enforcement, said the goods were being smuggled into the country through porous border points, especially at Sofia, Tembo and Omungula roads.

Nkwasire said with the closure of the border and restrictions on interstate buses, traders had resorted to entrusting their money to third parties, most of whom are not licensed customs agents.

"These resort to smuggling the goods. In the end, it is our traders that are suffering. Therefore, we appeal to all traders to use only licensed customs agents to clear their goods," he said.

Other measures

Sseruma said the tax body is intensifying efforts to encourage the public to do voluntary tax disclosure and has an array of penalties lined up for non-complaint taxpayers.

"Since we are in the COVID-19 season, we presume that voluntary compliance is a win-win for everybody. If you declare your tax due position, we shall also withdraw any penalties you would have suffered as a result of being caught. The money you would have paid in penalties can be re-invested to grow the business," he said.

Sseruma said already, sh15.9b has been realised from compliant taxpayers, especially manufacturers and importers.

He said the digital tracking system introduced last year, especially to track the volume of goods produced in tandem with taxes paid by manufacturers, has so far registered impressive results, with 175 manufacturers on board already.

Sseruma said in the tax heads, closely related with the impact of the digital tracking system, URA has seen surplus revenue growth in local excise duty and VAT for the months of July and August.

He said the volume of declarations in the beer and beverages sector has also gone up for the first time in three years.