The coronavirus pandemic triggered a never-before-seen economic catastrophe in Uganda, causing businesses to crumble as they battled to cope with the disease’s containment measures, which required a total lockdown. As hard as it has been for many, the URA revenue reported its highest performance in 4 years with a net revenue collection of UGX 19.2bn.
In a press briefing held last week, officials from URA told journalists that major growth was cited in a number of sectors like Wholesale and Retail trade, Manufacturing and the Information and Communication sector. Sectors that did not perform so well majorly attributing low revenue to the pandemic include Education, Accommodation and food service activities.
Digital efforts contribute to high URA revenue performance
Uganda Revenue Authority attributes the great performance to the digital efforts that were initiated recently in various areas. These efforts eased the collection process of taxes and filing of returns for taxpayers. As it has been observed, the government has taken on various initiatives to automate different processes in order to improve public service delivery.
Digital Tracking Solutions. The implementation of the Digital Tracking Solutions (DTS) and the 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.
Electronic Fiscal Receipting Solution. EFRIS contributed to the 14.73 percentage growth in VAT collections, through relaying real-time taxpayer transaction details to URA. This minimized underreporting of VAT collected from consumers.
Revamping the online services to taxpayers. 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).
Simplification of the TIN application process.
The top taxpayers hail from the Communication sector
Great as this is, let’s not forget that new taxes have been introduced even though we do not know the full effect of some of these taxes as yet. A look at the Information and Communications sector that covers the digital spectrum which is currently facing the new internet tax.
Telecom companies in Uganda make up the list of top taxpayers in Uganda with MTN Uganda in the lead. This makes it one of the major contributors to the tax revenue in the country as it has been praised for its role in economic growth.
As we all know, the controversial Over The Top (OTT) which is no more was a huge flop with such poor performance that was felt quickly after it was imposed. People found ways to dodge it as they opted for more alternatives.
However, the new tax that replaces it is not an easy one to dodge as it now covers the use of all services across the internet. In recent weeks, we have seen telecom companies make their stand known as they stated their adjustments towards data rates that people anticipated could change quickly.
MTN Uganda, the biggest taxpayer in Uganda took its stand and said that its rates would not change in regards to the tax. This means that the telco will take on the burden on behalf of its customers.
In a bid to increase revenue with new taxes, could this instead constraint the revenue of some of the biggest taxpayers in the country as the taxes target their services? Even as some of these companies have taken on the burden of paying the taxes on behalf of customers, the long-run effect on their revenue remains unknown and all we can do is observe.