May 5, 2014

URA In Shs 331B Collection Deficit

Uganda Revenue Authority (URA) continues to register an increase in tax collection shortfall for the financial year 2013/14.

The shortfall has increased to 331 billion Uganda Shillings in the ten months to March 2014, up from 270 billion in the eight months to February 2014. According to Protazio Begumisa, the acting Commissioner General URA at the release of the latest revenue collection figures, the shortfall has been largely due to the low profitability and losses posted by at least 347 major companies in Uganda.

URA boss Allen Kagina
URA boss Allen Kagina

More than half of this deficit, 176billion Uganda Shillings, is attributed to the limited profitability of the banking, telecoms and industrial subsectors and sectors. Banking recorded the largest shortfall of 51 billion Uganda Shillings, whereas telecoms had a deficit of 30 billion Uganda Shillings. Begumisa said they would carry out audits on these companies to confirm whether these losses were real.

URA admits that the performance of the economy fell short of their expectations which in turn affected revenue collections. The tax body took note of the economic growth that would grow at 5.6percent, down from the projected 6 and 7 percent.

URA says this affected Value Added Tax (VAT) and excise duty. Additionally, inflation also averaged 7 percent instead of the projected 6.2percent, which negatively affected the production of goods and services. Begumisa says this partly explains the performance of VAT on goods and services and corporation income tax mainly due to the reduction in production activities.

The tax body also blamed the less than impressive borrowing by bank customers due to high interest rates. Begumisa also said the new tax measures that had been proposed in the 2013/14 budget were reversed by parliament, which led to 31.8 billion Uganda Shillings in tax revenues forgone.

Begumisa is confident, riding on hope that there was still the possibility of URA hitting the target, or close down on the deficit in the final two months of the year. He specifically pointed out that June of every financial year has proven to deliver more tax revenue.

URA was given a target of 8.5 trillion Uganda Shillings by the Ministry of Finance, but since the beginning of the financial year, it has struggled to meet this target. According to the 2014/15 National Budget Framework Paper, the ministry of finance is set to give URA a target of 9.8 trillion Uganda Shillings, an increase of 20percent from 2013/14 financial year. The same document indicates that URA’s shortfall in 2013/14 is likely to be 302 billion Shillings.

Jolly Kaguhangire, the Assistant Commissioner, Service Management in the Domestic Taxes Department, explains the various measures being put in place to at least reduce the target.

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