For a very long time, the Uganda Revenue Authority (URA) has been unable to surpass its revenue collection targets, largely due to tax evasion by tax payers.
However, in the first quarter of the 2020/21 Financial Year (July, August and September), URA has exceeded its targets by collecting revenue worth hundreds of billions of shillings in surplus.
Garry Kizito, the manager business analysis, Digital Tracking Solutions (DTS) and Electronic Fiscal Receipting and Invoicing (EFRIS) project at URA, attributed the achievement to the introduction of DTS and EFRIS.
On November 1, 2019, URA began the implementation of Digital Tracking Solutions also known as Digital Stamps as a mechanism of identifying and marking manufactured products.
Among the reasons why URA initiated the system was because manufacturers were used to a tendency of not disclosing the quantity of manufactured products and in turn evade taxes for a variety of manufactured products, smuggled goods that evaded taxes among others.
Similarly, the Authority on July 1, 2020 rolled out the Electronic Fiscal Receipting and Invoicing Solutions (EFRIS) as a Government smart solution for issuance of electronic invoices/ receipts in respect to business transactions for taxation purposes.
EFRIS was initiated to curb various challenges including unfair tax assessment, missing or improper business records, unfair business competition, invoice trading/ fictitious or fabricated invoices, lengthy tax audits, poor tax payers’ record keeping and complex tax procedures such as tax return submissions among others.
Kizito said that the introduction of DTS and EFRIS significantly enabled URA achieve and surpass it’s revenue collection targets.
“For the months of July and August, we have recorded surpluses in our revenue collection and mainly in the tax areas of excise duty and VAT (Value Added Tax) and our initiatives of the Digital Tax Stamps and the Electronic Fiscal Receipting and Invoicing Solutions (EFRIS) have played a very big role in contributing to this revenue surplus,” he said.
Despite the achievements, Kizito noted that URA did not collect much revenue in the category of PAYE (pay as you earn) due to the outbreak of COVID-19 pandemic which forced many business to reduce on workforce and paying of half salaries.
“We did not collect our targets in the area of PAYE but in areas of excise duty and VAT, we were able to hit our targets and overall, our revenue targets were exceeded. Thanks to EFRIS and DTS,” Kizito said.
Kizito decried the informal sector which he said is not regulated and poor at keeping records which in turn makes many players in the sector evade taxes. He however added that EFRIS will solve the challenge.
“Our informal sector in Uganda is about 53% of the economy. That is a very huge percentage of the economy and yet they do not contribute a single coin to the tax collection.”
“So, what EFRIS does for the economy is that it provides a solution for record keeping. You don’t need to go and buy receipts anymore because you don’t want to incur a cost of printing receipts. EFRIS will give you electronic receipts so you will save the cost of stationery. It also maintains records for you because records are maintained in digital form. So, anytime as a businessman, you are able to click and monitor performance of your business on a daily, weekly, monthly basis and the system will have the ability to monitor your business,” he said.
It should be noted that some businesses deliberately run informally because they don’t want their information to be known to tax authorities in order to evade taxes. However, with EFRIS, there is a system in place that records every transaction that takes place.
To improve on record keeping and curb tax evasion especially VAT, Kizito revealed that URA will initiate a campaign to give out prizes to the consumers who purchase goods and demand receipts from the sellers.
“One of the benefits for our consumers is, we are going to run a campaign where we shall be giving out prizes. So, what you need to do as a consumer is that every time you go to buy an item (from a shop, supermarket, business), just ask for your receipt and keep the record of that receipt.”
The receipt will have unique features on it such as a Fiscal Document Number (FDN), verification code and a Quick Response (QR) Code and a consumer will be required to give in their telephone contacts.
“We are going to collect the data from all the consumers, all the purchases done by the consumers and we shall run a campaign where we shall be rewarding consumers,” he said.