Uganda Revenue Authority (URA) has registered a staggering Shs 160bn shortfall in the domestic tax collections for the month of January, 2024.
This is in addition to the Shs 120 billion domestic tax shortfall in December 2023.
URA had collected domestic revenue of Shs 2.131 trillion against its expected revenue collections of Shs 2.251 trillion for November, 2023.
Now, according to a report released in February, 2024 by the Ministry of Finance, “Domestic revenue collections during January 2024 amounted to Shs 2,225.16 billion against the month’s target of Shs 2,385.55 billion.”
The report reads in part: “This implies a performance rate of 93.3% and thus a Shs 160.39 billion shortfall as both tax and non-tax revenues were lower than their respective targets for the month.”
The report further showed that, “Tax revenue collections for the month (January 2024) amounted to Shs 2,122.54 billion, posting a 95.9% performance against the planned Shs 2,212.11 billion.”
This lower-than-target performance was mainly driven by the shortfalls in collections for indirect domestic taxes (Shs 55.89 Billion) and taxes on international trade (Shs 66.04 billion) which more than offset the Shs 39.70 billion surplus registered for direct tax collections during the month, according to the Finance Ministry.
Indirect domestic tax collections amounted to Shs 575.33 billion, implying a 91.2% performance rate against the planned target of Shs 631.22 billion during January 2024.
URA officials explained that this was on account of lower than anticipated collections of VAT and Excise duty partly occasioned by tax administration challenges such as the difficulty in effectively implementing EFRIS and the Digital Tax Stamp (DTS).
Import duty
Taxes on international trade also registered a shortfall against the planned Shs 877.20 billion target for the month.
URA told the Ministry of Finance that this was mainly due to lower-than-projected imports on which VAT and Excise duty are charged.
On the other hand, direct domestic taxes amounted to Shs 739.58 billion against the planned Shs 699.87 billion for the month. This surplus was mainly on account of higher collections for PAYE, Corporate tax, and Withholding tax collections during the month of January 2024.
The decreasing tax collections imply taxpayers are going through tough times as the economy recovers from the negative effects of the COVID-19 pandemic.
On December 7, 2023, Ramathan Ggoobi, the permanent secretary of the ministry of Finance, summoned the top management of URA to explain why there was a shortfall in revenue collections for the month of October, 2023 amounting to Shs 600 billion.
Observers say URA could be more aggressive in tax collections by exerting pressure on taxpayers.
The URA is currently contributing 47 per cent of the national budget, while the total revenues collected annually amount to just 14.3 per cent of the Gross Domestic Product, compared to the African average of 18 per cent.
This low collection levels have seen Uganda’s high reliance on external budget support persist, continuously pushing up the debt burden.
According to the State of the Economy report released by Bank of Uganda in December 2023, debts continue to pile a lot of pressure on tax revenues.
“Interest payments and external debt principal repayments exert elevated pressure on tax revenues to the extent that for every 100 shillings collected in tax revenues, 32 goes to debt service, diminishing resources available for service delivery,” the BoU report observed.
In December 2023, Parliament approved loans worth over Shs 6.868 trillion to fund a supplementary budget; construction of e-government infrastructure and implementation of climate smart agriculture projects.
