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Largest share of tax income is from trade, car repairs, URA data indicates 

URA says that repair of motor vehicles and motorcycles contribute one of the largest amounts of taxable revenue. Photo / File 

What you need to know:

  • Wholesale and retail trade and automobile repairs come ahead of manufacturing and financial and insurance services in terms of contribution to tax  revenue 

Wholesale and retail trade and repair of motor vehicles and motorcycles contribute the largest in terms of tax revenue, according to data from Uganda Revenue Authority (URA). 

The details, which are contained in the URA April to June Newsletter, indicate the two sectors have in the last three financial years contributed the largest tax amount, coming ahead of manufacturing, and financial and insurance services. 

URA data indicates that during the 2021/22 financial year, wholesale and retail trade and repair of motor vehicles and motorcycles contributed Shs6.2 trillion, followed by manufacturing and financial and insurance services, which contributed Shs4.99 trillion and Shs2.3 trillion, respectively.

However, URA does not indicate the share of taxpayers in the above sectors. 

The newsletter, which highlights a number of activities, developments and performance of the tax sector, also indicates that as of May, URA had more than 3.2 million taxpayers on its register, which is relatively a small number compared to those still outside the tax fold. 

Mr John Musinguzi, the URA commissioner general, recently said that at least 5.2 million Ugandans, who are engaged in different economic activities, were outside the tax fold, yet majority of them fit within the taxable fold. 

URA data indicates that as of May, income tax had more than 2.47 million taxpayers, followed by import and export duties, which had 1.12 million taxpayers. 

The data further indicates that pay as you earn, which is largely a big contributor to domestic taxes, by May had 46,443 taxpayers, while valued added tax had 31,308 taxpayers.  Stamp duty had 732,516, about 952 for local excise duty, while gaming and pool betting tax and withholding tax had 141 and 9,791 taxpayers, respectively.  

However, data indicates that pay as your earn, despite the low numbers compared to other tax heads, tops contributions for direct domestic taxes, with an annual contribution of Shs3.63 trillion during the 2021/22 financial year. 

Pay as you earn is followed by corporate tax with Shs1.63 trillion and withholding tax with Shs1.17 trillion.  
Among indirect taxes, beer, phone talk time and soft drinks, are the biggest contributors in terms of excise duty, contributing Shs322b, Shs289b and Shs176b, respectively.   The three, URA noted, have been the biggest excise duty contributors for the last three consecutive financial years. 

Government, through the Domestic Revenue Mobilisation Strategy, is seeking to grow more tax revenue as a measure to increase Uganda’s tax to gross domestic ratio to at least 18 percent by the 2024/25 financial year.  This has as a result seen URA deploy a number of measures, among which include, EFRIS, digital tax stamps, automation of ledger reconciliation and TIN registration, to grow the domestic taxpayer register, expand the tax base and grow revenue collections by on-boarding unregistered potential taxpayers. 

Tax to gross domestic product ratio remains below 13 percent yet there has been a substantial increase in revenue demands.  

URA data indicates that highest value added tax contribution on domestic taxes, comes from phone talk time with Shs248b, followed by electricity and beer, which contribute Shs195b and Shs152b, respectively. Value added tax contributions on domestic taxes average at about Shs1 trillion annually.  

Status of international taxes   
 
Value added tax on imports brings in the highest collections for international taxes, contributing Shs3.29 trillion.

This is followed by petroleum duty with Shs2.68 trillion and import duty, which during the 2021/22 financial year contributed Shs1.55 trillion.                                                                                        

In the business income bracket, the largest number of taxpayers belong to businesses with an income gap of less than Shs50m. During the 2021/22 financial year, this category had 48,983 taxpayers followed by the income bracket of Shs50m to Shs500m, which had 3,923 taxpayers.                    

However, URA details indicate there was a decline in the number of taxpayers in the two income brackets compared to the 2018/19 financial year, where they had 78,302 and 10,385 taxpayers, respectively.                                                                   

The decline is largely attributed to the impact of Covid-19 on businesses and the larger economy.

URA data also indicates that large taxpayers, who have an annual turnover of more than Shs30b have been declining even as they still contribute more 70 percent of tax revenue.                                                                     

During the 2018/19 financial year, URA data indicates, large taxpayers stood at 1,155, but declined slightly to 1,126 taxpayers during the 2019/20 financial year, before declining further by 21 and 46 taxpayers during the 2020/21 and 2021/22 financial years, respectively.