There have been public outcries over the alleged unfair taxation in Uganda that has led to closure of some businesses. However, the jigsaw puzzle of who actually pays is still complex.
URA currently has more than 3.2 million registered taxpayers most of whom are individuals. In terms of taxpayers registered by tax heads by May, income tax had over 2.47 million taxpayers, import and exports had 1,123,891 taxpayers, and PAYE had 46,443 taxpayers. In addition, VAT had 31,308 taxpayers, 732,516 for stamp duty, 952 for local excise duty, 141taxpayers for gaming and pool betting tax, and 9,791 taxpayers for withholding tax.
In terms of revenue contributions from the financial year 2021/2022, PAYE topped the direct domestic taxes for the last 3 financial years with UGX 3,634Bn in FY 2021/2022, followed by corporate tax with UGX 1,635Bn, and withholding tax at UGX 1,177Bn for the same period.
The biggest contributor for indirect domestic taxes in terms of excise duty is beer with UGX 322Bn, followed by phone talk time at UGX 289Bn, and soft drinks at UGX 176Bn for the last financial year. These three have topped excise duty contributions for the last three consecutive financial years.
The highest VAT contributions came from phone talk time with UGX 248Bn, followed by Electricity with UGX 195Bn and beer at UGX 152Bn. However, it is notable that whereas there was no data on other goods and services for last financial year, this VAT contributor has always had the highest collections of over UGX 1trillion.
VAT on imports brings in the highest collections for international taxes and it contributed UGX 3,291Bn last financial year, followed by petroleum duty with UGX 2,686Bn and import duty which contributed UGX 1,557Bn. The three topped the year on year international tax collections.
For the business income bracket, the largest number of taxpayers belong to the business income gap of less than UGX 50M with 48,983 taxpayers in FY 2021/2022 followed by the income bracket of UGX 50m to UGX 500m with 3,923 taxpayers. However, there was a decline in the number of taxpayers in these two income brackets compared to FY 2018/2019 where they had 78,302 taxpayers and 10,385 taxpayers respectively. The decline is largely attributed to the effects that the COVID-19 pandemic had on Uganda’s businesses and the economy globally.
URA classifies taxpayers with an annual turnover of UGX 30 billion as large taxpayers. From the Taxmandata, this taxpayer class (with business income between UGX 30Bn to 100bn) shows a decline in the number of taxpayers in the category given that FY 2018/2018 had 1,155 taxpayers, FY 2019/2020 had 1,126 taxpayers, FY 2020/2021 had 21, while FY 2021/2022 had 46 taxpayers in this category.
It’s noteworthy that the large taxpayers contribute over 70% of total revenue annually from the different sectors, tax heads and income groups classified by URA.
The wholesale and retail trade; repair of motor vehicles and motorcycles sector has topped year-on-year sectoral revenue collections for the last three fi nancial years. In FY 2021/2022, this sector contributed UGX 6,203Bn followed by manufacturing with UGX 4,998Bn collections, and fi nancial and insurance services with UGX 2,306Bn
While the Uganda Registration Services Bureau (URSB) business register has over 220,000 registered businesses, the URA commissioner General, John Musinguzi, recently noted that there are an additional 5.2 million Ugandans engaged in economic activities and fi t to contribute revenue to the national coffers but are not. This leaves the question on where all these businesses are and their stand in their tax affairs.
Government deployed the Domestic Revenue Mobilisation Strategy that seeks to grow more collections in domestic taxes with key outcomes such as advancing Uganda’s tax to GDP ratio to at least 18% by FY 2024/24.
As a result, systems such as EFRIS, DTS, automation of ledger reconciliation and TIN registration have been introduced to grow the domestic taxpayer register, expand the tax base and ultimately grow revenue collections by on-boarding the unregistered potential taxpayers lurking in the dark.