Car Imports, Hotel Short Stays Rise, Fuel Consumption Falls -URA

Although Uganda Revenue Authority – URA has reported collecting 94.8 billion shillings less than the targeted collection for the first half of the year 2022/2023, it has all the same registered a revenue growth of 1.5 trillion shillings over the same period last year.

Net collections amounted to 11.670 billion trillion shillings out of the target of 11.764 trillion shillings, which is also slightly higher than the target for the remaining half year. 

This performance, representing 99.2 percent was a big improvement from the previous year’s first half which registered a shortfall of 900 billion shillings. By the end of this financial year, in June, the tax body is expected to have collected 25.151 trillion shillings. 

URA Commissioner General John Rujoki Musinguzi is sure that they will meet the target for the year if it all goes according to their plan, despite having a higher target set by the ministry. 

The Domestic revenue segment performed better than the target with a surplus of 19.2 billion shillings, having grown by 1.240 trillion from the same period the previous year.   

Direct domestic taxes registered a surplus of UGX 84.74 billion, Non-tax revenue posted a surplus of UGX 171.08 billion while indirect domestic taxes posted a shortfall of UGX 236.50 billion. 

Direct taxes like Pay As You Earn, casino taxes, rental taxes and taxes on bank interest were the main sources of the surplus, while indirect taxes registered a shortfall. 

The growth and good performance of PAYE was attributed to growth in the wage bill as companies reportedly expanded their payrolls, while URA also enhanced its arrear recovery initiatives. 

On the other hand, international trade taxes registered a shortfall and some import sections registered declines.  

Duty on petroleum products, for example, had a shortfall of 69.8 billion out of the targeted 1.345 trillion shillings as lower than expected imports were recorded. 

VAT on imports also recorded a big shortfall of 42.9 with others coming from excise duty, withholding tax, infrastructure levy and export levy.  

Import duty on the other hand performed better than the target because of an increase in goods that attract that tax, with motor vehicles taking the lead with an increase of 113 billion shillings.

Commissioner for Customs, Abel Kagumire said a total of 184,160 motor vehicles or 30,000 per month, were imported over the six-month period, 30 percent of which were re-exported.

Kagumire said personal and luxury vehicles continue to dominate Uganda’s vehicle imports even as the government encourages importation of commercial ones with tax incentives.

Other increases in import duty were registered in clothing, edible oil, motorcycles, and petroleum oils among others.  

Overall the country’s imports amounted to 15.114 trillion shillings posting a growth 19 percent compared to the same period last financial year.

The main increases in volumes of imports were in gold, palm oil, medicaments, wheat/meslin, persons motor vehicles, polymers, polyethers, motorcycles, insecticides, worn clothing and rolled iron steel among others.  

Main reduction were in vaccines, Portland cement, goods motor vehicle, rice, sorting machinery, the flat rolled product of alloy steel, new pneumatic tyres, and other footwear among others. 

Uganda’s exports amounted to 4.235.7 billion, showing an increase of 7.13 percent, enhanced by the improved trade condition after most Covid-19 restrictions were removed globally.

The wholesale and retail trade sector had the biggest contribution to tax revenues, with 3.3 trillion shillings or more than a quarter, followed by the manufacturing sector with 2.7 trillion. 

Others are the financial activities, the ICT sector and the compulsory social security contributions.  

The sectors that were under lockdown the longest posted the highest growth rates in tax revenues, with the arts, entertainment and recreation sector leading with a growth of 186 percent or 69 billion shillings in tax contributions, followed by the education sector with 65.6 billion or 47.7 percent growth. 

From the arts, entertainment and recreation sector, most of the growth rates came from gambling and betting activities, while short-term accommodation activities grew by 78 percent or 27.7 billion shillings in taxes.   

Botanical and zoological gardens and nature reserves activities posted growths in taxes worth 12.25 billion shillings or 328.44 percent.

URA reports that at least 449,975 new taxpayers have been added to the taxpayer register during the period, more than twice the target, bringing the total number of taxpayers to 3,067,983.   

By the end of the period, URA was yet to recover almost 4.7 trillion shillings in arrears most of it held by domestic taxpayers, while arrears worth 562 billion were recovered over the period. 

To recover from the deficit and even meet the target over the next six months, URA is banking in increased tax education campaigns, through mass media and their mobile tax office, the Tujenge Uganda Bus.Currently there are two units of these. 

The authority also plans to continue rolling out the electronic Fiscal Receipt and Invoicing system (EFRIS), Non-Intrusive Inspection System, the Automated Integrated Warehousing Information Management System (BWIMS) and Rental Tax Compliance System to improve revenue collection and close revenue leakages. 

 The URA will also enhance skilling of staff for what they consider harder tasks including auditing of the complex telecommunications sector. 

Recently, President Yoweri Miseveni named this sector as one of those with the highest number of under-declarations.

Musinguzi says the trained staff should be able to tell whether there are tax offenses being committed or not. 

He also said the review of the tax incentives regime will help increase revenues, though they cannot be abolished totally. 

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