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Uganda: URA in Shs188 Billion Revenue Shortfall

 

Kampala — The Uganda Revenue Authority registered a tax revenue shortfall of Shs188 billion in the last financial year, failing to hit its target of Shs3.9 trillion.

URA Commissioner General Allen Kagina said while releasing the tax body's performance report yesterday (14 July 2009) that deficits in domestic taxes; Value Addition Tax (VAT), Corporate and Excise duties, was the major cause of failure to hit the targets set by the Minister of Finance.

She said URA last year collected Shs3.66 trillion, a figure below the set target of shs3.9 trillion, but she was buoyant that the tax body would meet this year's Shs4.47 trillion target, citing the management focus on closing tax leakages, including smuggling.

Ms Kagina told journalists at URA headquarters that out of the total shortfall, the domestic taxes had a deficit of Shs156 billion, making over 70 per cent of the total tax revenue deficit.

The reduction in VAT, Corporate and excise tax, according to Ms Kagina, was caused by increased costs incurred by telecommunication, beer, electricity and cement companies due to massive investments to meet the increased demand in the region.

"Due to these investments, the tax base reduced because there was reduction in profits made by these companies," she told journalists.

Other contributors to the shortfall were constraints in fuel sector, reduction in international trade tax collections, smuggling and global financial crisis which slowed down Uganda's economic growth to 6.2 percent from the projected 8.1percent.

However, compared to 2007/8, URA registered a growth of 15.8 per cent of the revenue collection in the last financial year.

The tax collection body also saw improvements in Tax-heads like Pay As You Earn, Withholding tax and Tax on Bank interest which collectively registered a surplus of Shs70bn.

Ms Kagina said, "The improved performance (of PAYE) is attributed increased compliance by employers, while Withholding tax performance is attributed to increased provision of government services through private supplies and close monitoring of Withholding Agents".

Despite the shortfall, government in this financial year increased the URA target to Shs4.4 trillion, yet there were no increases in taxes.

On the duplication of vehicle registration numbers, the Commissioner in charge of investigations, Geoffrey Balamaga said the victims of the scam will have to pay for new number plates.

"We have impounded over 40 vehicles and we are targeting at least 400. But the owners who innocently fell victims will be allowed to pay for new number plates," he said.

By: Risdel Kasasira and Faridah Kulabako

The Monitor (Kampala)

15 July 2009