Tax Collections drop as URA reports a 900BN shortfall in the last six months

Commissioner General Uganda Revenue Authority John R Musinguzi; Courtesy Photo

The revenue collections for Uganda in the last six months dropped with a performance report of Uganda Revenue Authority (URA) for the period of July to December 2021 showing a revenue shortfall of 900.81BN

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 it’s 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 bellow 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 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).

the factors that influenced the registered performance

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, 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%.

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 data from URA 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 states 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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