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URA records increased compliance due to digital tax solutions
Compliance has increased among excisable and value-added tax-rated goods, according to URA. Photo / File
What you need to know:
- The increase in compliance, URA says, has been more noticeable among excisable and value-added tax-rated goods with the number of companies using the solutions rising from 600 last year to 1,060 companies.
Uganda Revenue Authority (URA) has said compliance among taxpayers subject to excisable duty has risen due to implementation of digital tracking solutions.
The compliance, Mr Ibrahim Bbosa, the URA communications and corporate affairs assistant commissioner, said has been more noticeable among excisable and value-added tax-rated goods with the number of companies using the solutions rising from 600 last year to 1,060 companies.
“The implementation of digital tax solutions has resulted in a 39 percent overall revenue growth from collections, primarily in value-added tax and local excise duty,” Mr Bbosa said, noting that digital tax stamps, in particular, had experienced substantial growth, contributing to enhanced tax compliance, increased production, and higher revenue for manufacturers.
In November 2019, government implemented digital tax stamps, saying there was need to close tax leakages.
Government has since registered year-on-year growth of more than 10 percent in terms of compliance among manufacturers covered under the gazzetted digital tax stamps goods.
For instance, during the 2021/22 financial year, according to URA, digital tax stamps compliant companies grew from 211 to 364, before growing further to 545 companies and 140 importers.
The growth has led to an expansion of the tax register, which, as of April 2023, recorded approximately 3.36m taxpayers, with URA indicating that digital tracking solutions have compelled more companies to join the tax net.
Over the past five years, URA has implemented various digital tax solutions, including digital tax stamps, Electronic Fiscal Receipting and Invoicing Solution and Rental Tax (currently in the piloting stage).
Digital tax stamps, initially covered selected goods such as mineral water, soda, cigarettes, tobacco products, spirits, beer, and wine, but were later expanded to included sugar, cement, and cooking oil. There are plans to extend the stamps to fruit and vegetable juices, alcoholic and non-alcoholic beverages, and other fermented goods.
Government has implemented strict measures against non-compliance, increasing penalties for dealing in unstamped products from Shs30m to Shs100m and imprisonment or both.
Mr Keefa Kiwanuka, the Parliamentary Finance Committee chairperson, said during the passing of tax amendments that the measures seek to recover tax losses resulting from tampering with digital tax stamps.
URA has previously said digital tax stamps were introduced to promote fair competition, protect consumers from harmful products, increase tax revenue and combat illegal.
However, URA notes, that whereas there is an increase in compliance, there is still more need for continuous tax education, especially on digital tracking solutions and enforcement.
