Covi-19 Impacts: Uganda’s Tax Collection Drops As URA Registers 900Bn Shortfall In Six Months

Covi-19 Impacts: Uganda's Tax Collection Drops As URA Registers 900Bn Shortfall In Six Months

URA Commissioner John Musinguzi

By Uganda Online Media

Kampala: The Uganda Revenue Authority (URA) incurred a revenue shortfall of shs901 billion between July to December 2021.

This was revealed by John Musinguzi, URA Commissioner General during a news conference on Wednesday while highlighting the revenue performance for the period of July to December 2021.

Musinguzi said URA was given a revenue target of Shs 22.4 trillion which is 16.10% higher than the actual revenue collection from the last financial year.

The half-year final report issued today indicates a shortfall of UGX 900.81 billion during the first 6 months of this FY 2021/22 with net revenue collections amounting to UGX 10,163.09 billion, against its target of UGX 11,063.90 billion.

The collected revenue however represents 45.44% of the annual target against the projected 49.47% by URA for the same period. It is also an increase of 16.80% (UGX1,591.43 billion) from the realized revenue for the same period last financial year.

From the report, the collections fell below the annual revenue target set for the authority by the Ministry of Finance, Planning and Economic Development (MoFED) of UGX 22,363.51 billion, which is 16.10% (UGX 3,100.51) higher than the actual revenue collection from the last financial year.

According to the report, domestic tax revenue collections in the last six months were UGX 6,229.62 billion against a target of UGX 7,180.94 billion, registering a shortfall of UGX 951.32 billion, and a performance of 86.75%. The shortfalls were from direct domestic taxes (UGX 273.61 billion), indirect domestic taxes (UGX 487.20 billion), and Non-Tax Revenue (NTR) (UGX 190.51 billion). 20.03% of the domestic tax shortfall was from Non-Tax Revenue (NTR).

During the period July to December FY 2021/22, the top 5 sectors contributors of revenue were wholesale and retail trade sector amounting to UGX 3,031.01 billion (29.41%), the manufacturing sector with UGX 2,413.36 billion (23.42%), the financial activity sector with UGX 1,064.43 billion (10.33%), the information and communication sector with UGX 880.97 billion (8.55%), and the Public Administration which contributed 3.75%.

In comparison to FY 2020/21, the URA report shows that there was a decline in revenue collection from the Information and Communications sector (by 14.55%), Electricity, gas, steam, and air conditioning supply (by 37.79%), Real estate activities (by 10.78%), and the Construction sector which registered a decline by 14.06%.

Click Here To Read Full Report From URA

According to URA, the decline in revenue collections is attributed to a slow down in business in these sectors resulting from the COVID-19 pandemic impact.

Other highlights in the report; Direct domestic tax collections in the first half of FY 2021/22, (July – December 2021) were UGX 3,376.74 billion collected against a target of UGX 3650.35 billion and a deficit of UGX 273.61 billion, posting a performance of 92.5%. This was however an increase in growth of UGX 137.12 billion (6.35%) compared to the same period in the FY 2020/21.

Cumulatively, during the period July to December, VAT worth UGX 1,518.71 billion was collected against a target of UGX 1,874.11 billion registering a performance of 81.04% and a shortfall of UGX 355.40 billion. As a result, a growth of UGX 75.23 billion (5.21%) was registered compared to the same period in the previous Financial year.

The report further shows that while revenue collections increased from 6878BN shillings to 10,163BN shillings in the last 5 years, the revenue growth rate has been unstable with a gradual increase in the first financial year 2018/19 (18.2%), then dropping sharply to 4.77% in 2020/21, and now steadily growing at 7.29%.

The report however noted that during the period of July to December of the FY 2021/22, 182,553 new taxpayers were added to the taxpayer register. As a result, as of the end of December 2021, the taxpayer register had 1,966,106 taxpayers.

Of these, 150,849 were non-individuals, and 1,815,257 were individual taxpayers. This, according to URA, represents a growth of 10.24% against a targeted growth of 7.50%. Of those new taxpayers, in the last six months (first half of the FY 2021/22), at least 33,341 of them became value taxpayers, from whom UGX 13.12 billion was generated.

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