URA deploying tech to expand tax base
World Business Journal talks to John Musinguzi Rujoki, Commissioner General, Uganda Revenue Authority (URA), about the country’s tax regime, initiatives aimed at enhancing both domestic and cross-border tax compliance, and the impact of digitalization and integrated artificial intelligence on advanced analytics and risk mitigation to boost revenue mobilization.
How competitive is Uganda’s tax regime within East Africa?
Uganda’s tax regime is relatively on par with other East African countries. Key tax rates, like VAT and corporate income tax, closely resemble those in neighbouring countries. The VAT rate stands at 18%, aligning with Rwanda, Tanzania, and Burundi, while slightly higher than Kenya’s 16%. The corporate income tax rate is generally around 30% throughout the region.
It should also be noted that countries within the East African Community (EAC) operate import taxes within the framework of a common external tariff. The implication then is that our tax rates tend to be the same across the region and we all apply zero import duty for goods that originate from the region. This helps to promote intra-regional trade.
Our economy is also young with immense growth potential, offering an attractive tax regime and generous incentives. Tax administration focuses on revenue collection and business facilitation, ensuring timely support and a level playing field. We collaborate with taxpayers and investors to achieve success, as thriving businesses lead to higher profits and better tax contributions.
What efforts are being made to improve domestic and cross-border tax compliance and revenue collection?
Efforts to improve tax compliance focus heavily on enhancing domestic tax collection, recognizing this as crucial for the country’s future self-sufficiency. Over the past decade, the focus has shifted from international trade taxes (which once surpassed domestic taxes) to domestic taxes, due to policies promoting import substitution and local manufacturing. Currently, domestic taxes contribute about 60% of the revenue, up from 40%.
Key strategies include deploying technologies, educating taxpayers, and leveraging data to expand the tax base, which has grown to over 4.5 million taxpayers, up from 1.3 million a decade ago.
In order to boost cross-border tax compliance, we use non-intrusive scanning and the Electronic Cargo Monitoring System to monitor goods in transit across borders in real-time using electronic tracking seals.
We are also establishing a central container depot for improved import assessment and adapting to business changes through regional agreements.
How is digitalization enhancing revenue mobilization and supporting the formalization of the informal sector?
The transition from manual to online tax filing has simplified compliance, offering e-payment solutions, automated assessments, and enhanced advisory services.
Systems like EFRIS (Electronic Fiscal Receipting and Invoicing System) streamline the issuance of e-invoices and e-receipts, optimizing tax compliance and easing audit processes. Using Digital Tax Stamps (DTS), digitally traceable stamps are applied to products to ensure authenticity, verify tax payments, and combat counterfeiting.
We have employed Non-intrusive inspection with scanners at our customs boarders to detect illegal cargo entering the country, Bond Warehouse management system to facilitate clearance in bonded warehouses, Rental Tax Income Management solutions, a call centre that serves through multiple touchpoints [WhatsApp, web, email] and several taxpayer interface enhancements through improved functions of our web portal, the Mobile App, the new USSD menu. The aim is to empower the taxpayers and to minimize physical visits at our tax offices.
Through the Taxpayer Register Expansion Program (TREP) together with the Uganda Registration Services Bureau (URSB), Kampala Capital City Authority (KCCA) and local governments we created one-stop centers where all the business registration processes can be handled.
Under the TREP program, we encourage informal businesses to register and obtain a Tax Identification Number (TIN). This formalization opens access to financial services, government incentives, and credibility in the market, which are vital for business growth.
We plan to also automate excise warehousing and improve data processing with a Data Lake Solution. This approach will consolidate taxpayer data, integrate artificial intelligence for advanced analytics, and mitigate compliance risks.
Digitizing traditional methods comes with a learning curve. Many adapted well, but some local businesses faced hurdles. Ongoing efforts aim to highlight benefits, deliver regular training, and ensure clear communication.
