URA misses revenue targets in wake of slower GDP

May 17, 2017 in Finance by Editor

May 17—Uganda Revenue Authority (URA) returns for the last three quarters of financial year 2016/17 showed a shortfall of UGX 240 billion (about $67 million) based on nine-month targets, despite the tax collector posting outstanding performances during the last five years. However recent diminished economic activity is affecting targets.

“Uganda Revenue Authority collected UGX 9.2 trillion ($2.5 billion) in the past nine months of the financial year 2016/2017 however the Authority recorded a shortfall of UGX 240 billion in the same period,” Doris Akol the Commissioner General said.

Domestic Taxes contributed 57.17%  to the collections while international trade has contributed 42.84 ℅. Although collections for the last three quarters indicate a growth in revenue of 13.51℅ compared to the same period (nine months ago), Akol said the target of UGX13.1 trillion ($3.6 billion) which had earlier been set for the current financial year may not be achieved because of the economic slowdown. Uganda’s GDP for 2016/17 is forecast at 4.5% compared to 4.6% recorded the previous financial year. In other years, Uganda has been comfortably notching up growth of 5% and above.

Akol was presenting the latest Revenue Performance Review for the last nine months. “This economic turbulence has affected the level of economic activities and revenue collections from the key performing sectors with sectors like the manufacturing, construction and real-estate sectors registering negative growth which affected revenue collections,” she said.

The manufacturing sector registered a decline while the financial sector also suffered as private sector credit reduced significantly yet the majority of the traders depend on credit to run businesses and pay taxes.

Tax yield of major imported items and increase in re-exported and ex-warehoused goods also registered a decline. Although the tax body estimates that the expected impact of the economic slowdown to revenue mobilization is a shortfall of approximately UGX 131.17 billion, Akol said the introduction of new systems and procedures and also tightening revenue leakage points will help URA improve revenue efficiency.