Uganda Revenue Authority (URA) in the first half of the financial year collected more revenue than it had projected.
The tax body has confirmed a surplus of shs 25billion which has been attributed to improved profitability by companies, Value Added Tax on imports and withholding tax.
In the period of July 2014 to December 2014, corporate tax collections were shs 377 billion compared to a paltry Shs 37.8Billion – the lowest collection over the last three years – over the same period in the previous financial year.
Corporate tax is a form of income tax charged on profitability of a company, according to URA.
In last financial year the deficits in revenue collection had been attributed to lower profitability among Ugandan companies.
As a result URA missed the revenue collection target by shs 500 billion, which forced government to increase domestic borrowing. The tide, according to URA appears to be changing.
Doris Akol, the Commissioner General URA revealed that improvements in collections were from the banking sector, electricity and general business as a result of better profitability.
Figures released by URA indicate a 48% increase in Casino tax, 28% in Withholding tax and 10% on Pay-as-you earn on the domestic front.
The URA statement indicates that for both Withholding Tax and PAYE, the improvement in collection was as a result of increased remissions from the financial sector, oil and gas, telecommunications and manufacturing.
URA was given a collection target of shs 9.5trillion by the Ministry of Finance at the start of the financial year to finance at least three quarters of the shs 13trillion national budget.
Akol noted that with the surplus in the first half, they are confident of beating the overall collection target at the end of the financial year.
The low inflation environment, according to the URA statement has “escalated domestic demand and the level of economic activity leading to increased domestic tax collection.”
URA continues to heap praise on the Single Customs Territory, now in its second year for improving tax collections on imports into the country.
The statistics show increased collections on all taxes applied. The most significant increased collections were on petroleum duty, as petrol imports rose by 13.62% and VAT on imports.
URA however suffered foreign exchange losses of shs 18billion on tax collections as a result of the depreciating shilling. Additionally, VAT on electricity also dropped by almost shs 59 billion.
At the start of the financial year, URA implemented some tax measures such as excise duty of Kerosene, 10% levy on Mobile Money and several other exemptions were lifted.
This was supposed to bring in at least shs 375billion at the end of the financial. So far the revenue body has collected shs149billion.