Uganda Revenue Authority has released the revenue performance for the financial year 2020/21, indicating a growth in revenue of 14.99%.
According to the report released on Thursday, in the FY 2020/21, URA collected net revenue of UGX 19,263.00 billion and posted a growth in revenue of 14.99% in comparison to the FY 2019/20 and an estimated tax to GDP ratio of 12.99 percent1.
John Rujoki Musinguzi Commissioner General URA says that in real terms, this reflects a growth in revenue of UGX 2,511.36 billion and a growth in the Tax to GDP ratio by 1%. This the highest growth registered in the last four years.
Today’s performance release was held under the theme; 30 years of Developing Uganda Together.
Rujoki however told the press, that the outturn of the FY 2020/21 is short of the target of UGX 21,638.65 billion by UGX 2,375.65 billion.
“It is important to note that this was the target approved by Parliament before the impact of Covid-19 set in and macroeconomic variables that affect revenue such as GDP growth were projected at 6% yet by the end of the financial year GDP growth was at 3%” he said.
According to the report, domestic revenue collections in the FY 2020/21 were UGX 12,144.01 billion, registering a growth of 13.71% (UGX 1,464.19 billion in real terms) in comparison to the FY 2019/20. However, the collections were below the target of UGX 14,038.18 billion by UGX 1,894.18 billion.
In the FY 2020/21, customs revenue collections were UGX 7,505.86 billion against a target of UGX 8,001.35 billion, registering a significant growth of 16.43% (UGX 1,059.27 billion) in comparison to FY 2019/20. However, the collections were UGX 495.48 billion below target.
In FY 2020/21, 71% of the revenue was generated from the top 4 sectors. The wholesale and retail trade sector had the biggest contribution, which amounted to UGX 5,783.69 billion (29.43%). The manufacturing sector followed with a contribution of UGX 4,461.29 billion (22.70%). The Information and communication sector contributed UGX 2,059.83 billion (10.48%), while UGX 1,643.54 billion (8.39%) was generated from the financial and insurance services sector.
There was a growth in revenue from key sectors like manufacturing which grew by 27.52%, Information and communication by 25.73%, wholesale and retail by 19.13% and financial and insurance services by 5.55%.
On the other hand, there was a decline in revenue collected from some sectors in the FY 2020/21, compared to 2019/20. Revenue from Accommodation and food service activities declined by 37.38%, Education sector by 10.35%, Arts entertainment and recreation by 31.39%. The decline is attributed to slow down in business in these sectors resulting from COVID-19 pandemic impact.
In regards to the EAC region, URA had the highest year on year revenue growth (14.99%). Tanzania collection in FY 2020/21 was less that that collected in FY 2019/20 by 0.1%. Kenya, Burundi and Rwanda Revenue Authorities met their targets in the FY 2020/21, but it should however be noted that these were set in consideration of the Covid-19 impact.
Rujoki says the significant growth of 14.99% in revenue can be explained by the; Debt recovery of UGX 1,024.38 billion mainly attributed to Alternative dispute resolution (ADR) which contributed over UGX 365 billion, the voluntary disclosure initiative, close monitoring of Memorandum of KRA OBR RRA TRA URA Growth in Net Revenue Collections FY 2020/21 3.90% 11.72% 9.00% -0.10% 14.99% -2.00% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% % growth in FY20/21 vs FY 19/20 6 Understanding (MOUs) for installment payment, and enforcement mechanisms among others.
The implementation of the Digital Tracking Solutions (DTS) and the Electronic Fiscal Receipting Solution (EFRIS) boosted performance. DTS contributed to the 16.89 percentage growth in Excise Duty collections by aiding the enforcement and tracking of locally manufactured and imported goods. EFRIS contributed to the 14.73 percentage growth in VAT collections, through relaying real-time taxpayer transaction details to URA, thereby minimizing underreporting of VAT collected from consumers. It should be noted that both technologies are still being rolled out and not yet fully enforced.
Further on the tax administration front the growth in revenue is attributed to the quick response by revamping the online services to taxpayers such as different payment modes, online taxpayer education campaigns ( KAKASA), improved contact center (IVR4) (Toll free lines 0800-117000 / 0800- 217000), faster clearance of refunds5, introduction of a bonded warehouse information management system (BWIMS), simplification of the TIN application process, automation of the WHT exemption and Tax clearance certificate (TCC) issuance and many others.
“Customs revenue collections grew by 16.43% mainly due to a growth in imports by 37.38% in the FY 2020/21 compared to FY 2019/20. It should also be noted that only about 23% of total imports are dutiable. In the FY 2020/21, there was global re-opening of economies and supply chains” he said.
New tax administration measures announced through the budget speech of FY 2020/21 that included EFRIS, DTS, scanners, debt recovery, use of GPS and data analysis among others yielded revenue of UGX 1,111.01 billion against a target of UGX 548.00 billion, performing at 202.74%. While new tax policy measures implemented in the FY 2020/21 yielded net revenue of UGX 260.35 billion. The measures were majorly under; Income tax, Local Excise Duty, VAT, and Customs.
Meanwhile, the shortfall in revenue is mainly attributed to; The adverse impact of COVID-19 pandemic, which led to a slowdown in activities in some key sectors like education, accommodation and food services, among others. PAYE was one of the major tax heads affected leading to shortfall of UGX 315.51 billion, mainly due to scale down in
number of employees by some organizations.
It is also blamed on the corporate tax collections were also below target by UGX 239.93 billion, owing to losses made in the adversely affected sectors and Tax administration interventions such as audits, taxpayer compliance visits,
debt enforcement were all slowed down and for some months stopped because of the observation of SOPS.
During the FY 2020/21, 189,377 new taxpayers were added to the taxpayer register. By the end of the FY 2020/21, the taxpayer register had 1,783,493 taxpayers. In addition, process improvements were undertaken like the Tax
Identification Number (TIN) registration which has been simplified, from excel templates into a simple single web form to facilitate taxpayer registration. This has further been linked with the NIRA database to make it
easier to register for tax once you have a NIN.