The government commissioned a team of researchers from Makerere University and the Uganda Revenue Authority to get the facts responsible for the big part of the economy that is not recorded and taxed, also referred to as the Shadow Economy.
Professionals and corporate companies have been found to be
engaged in many economic activities that are not captured by the national
economy statistics and therefore are not paying taxes, according to a survey.
According to figures at the Uganda Revenue Authority, there
are only 1.5 million taxpayers in Uganda out of an estimated 10 million people
who are in gainful employment.
This is also far below the 18 million Ugandans that are within
the tax eligibility category.
The small tax base is responsible for the low tax revenues
that the country gets, which is about 14% of the economy, far below the
regional average of 17 percent.
It is also one of the reasons that the few taxpayers feel a
heavy burden of too many and high taxes, but it also means the country must
always rely on loans and external support to fund its annual budgets.
These are some of the reasons that the government
commissioned a team of researchers from Makerere University and the Uganda
Revenue Authority to get the facts responsible for the big part of the economy
that is not recorded and taxed, also referred to as the Shadow Economy.
The shadow economy is dominated by the informal sector, led
by agriculture, real estate and transport, especially taxis and boda bodas.
While some of them pay some taxes and dues, it is almost
impossible to know how much they make because their transactions with customers
are not registered.
The survey found that while some activities are
unintentionally hidden from statistics, other enterprises intentionally keep
them away for various reasons. They include the need to maximize profits by evading or
avoiding taxes, fear of the harsh penalties in case of non-compliance that may
include closure of business, and high and many tax regimes among other reasons,
according to the lead researcher, Ismail Kintu a lecturer at Makerere University
School of Business.
// ”Cue in: High tax rates ….
Cue out:… others, unknowingly.”//
The Uganda Revenue Authority says it has put in place many
measures to ensure that tax payment and management is as friendly as possible
to the paying public, because for time immemorial, tax has been largely treated
as a punishment.
Many people talked to on why people hide their activities
also blamed the tax regime as the major reason, as well as the fact that it is
not easy to tell the benefit of the tax paid by an individual.
The survey also revealed that even professional and corporate
organisations, including the formal business intentionally hide their
activities and under-declare them so as to avoid business.
Some members of the public blame the government for delivering
inadequate tax-funded services which discourages the public from paying taxes.
// "Cue in: Don’t you think…. Cue out:…. Be of great influence.
Nicholas Musoke, a research and policy analyst at Uganda
Revenue Authority says they will continue listening to the public to ensure the
tax sector is as friendly as possible through public sensitization and
introduction of tax payment systems that are easy to use.