URA posts 499 billion shillings deficit in first quarter

Uganda Revenue Authority has recorded a revenue deficit of 499 billion shillings in the first quarter of the financial year 2021/22 posting 4.4 Trillion shillings instead of its target of 4.9 Trillion shillings.

Despite the shortfall, the tax man was able to record a growth of 9.57% in comparison to last year in the same quota.

Addressing the media in Kampala , Commissioner General, John Musinguzi Rujoki said, “In the first quarter of this financial year, URA has collected net revenue of 4.459 trillion posting a growth of 9.57%. It should however be noted that the outcome of the first quarter is short of the target of 4.959 trillion by approximately 499.49 billion.”

The trend analysis for the last five years indicates continuous growth in the net revenue collections. The highest year to year growth was observed in the financial year 2018/19 with a record 17.82% and the lowest recorded in 2020/21 at 1.62% which is accredited to the adverse impact of COVID-19.

“However the collections were again below the target of 3.096 trillion by 440.75 billion. So the biggest shortfall on the target is coming from domestic taxes at 440 billion.”Rujoki said.

According to the Commissioner General, there are signs of recovery as portrayed by a growth in revenue of 9.67% expected to grow even further with the easing of restrictions.

He added that the growth of 9.57% is partly attributed to the URA administrative initiatives like arrears management which resulted into a revenue recovery of 322.63 Billion And cargo management to curb under and miss declaration which led to a revenue gain of 11.51 Billion Which supplemented collections from normal flows.

Sectoral contribution

In terms of sectoral contribution, 74.02% of the revenue was generated from the top 5 sectors during the first quarter.

The wholesale and retail trade sector had the biggest contribution, which amounted to 1.3 trillion (30.1%) followed by the manufacturing sector with 1,067.27 trillion (23.61 percent), financial activities contributed 353.66 billion (7.82 percent), while 338.36 billion (2.65 percent) was generated from the information and communication sector and 202.98 billion (4.49 percent) from public administration.

On a year to year basis, the Arts, Entertainment and Recreation sector grew by 97.24% mainly due to arrears recovery of 7.22 Billion From the gaming activities; Water supply, sewerage, waste management and remediation activities grew by 64.97% due to payment of arrears for the period between February 2021 and August 2021 worth 9.62 billion paid in the July to September. The Mining and Quarrying sector grew by 41.69% mainly arising from out of court settlements from Oil and Gas activities.

Shortfalls

However, there was a decline in revenue collected from some sectors in the first quarter of FY 2021/22, compared to same period in FY 2020/21. Revenue from the Electricity, Gas, Steam and Air conditioning supply sector declined by 17.31%, the Construction sector declined by 15.95% and the Real estate sector declined by 4.67% partly explained by continued Government restrictions which have affected the supply chains 7 and hence disrupted the on-trade market i.e. restaurants, hotels, events, institutions among others which has resulted into them operating below capacity.

On education services, and how closure of institutions affected the size of revenue collected, Acting Commissioner in charge of Domestic Taxes Sandrah Kaitare, noted that there was growth in contribution from the sector.

“whereas there has been closure there has been growth from the education sector, in the2020/21 we collected 75.52 billion and this financial year we have so far collected 118 billion; a growth of about 56%. As you are aware universities are open, students are doing exams, some international schools are open and doing exams, and PAYE from government education institutions is still being remitted.” She noted.

Among other efforts to increase the effectiveness and efficiency of Tax Administration, the tax man launched WhatsApp and web chat service to further enhance the URA client service support.

Relatedly, it was revealed that URA would profile and publish 30 most compliant taxpayers per region from the 6 jurisdictional regions of Uganda to further celebrate the most economic heroes of Uganda, leading up to the Taxpayers Appreciation Season which will run up to December 2021 under the theme: “30 years of Developing Uganda Together.”

Currently for the 3rd year in a row, the tax body is conducting The E- Bomba Ya Business Summit to address business opportunities and recovery during and after COVID19, taxation, Trade and Investment, Real estate and trade facilitation among others.