URA Records Huge Surplus Collections, But Quarter Two Might be Hard

The Uganda Revenue Authority has recorded a surprise surplus of more than 1 trillion Shillings in collections for the the first quarter of the financial year 2020/2021. In all the three months July to September, collections were above the target, reversing the high under-performing trend recorded between April and June, the months that the country was under strict lockdown measures.

The revenue collection for the Quarter amounted to 4.070 trillion Shillings, against the set target of 2.999 trillion Shillings. These are targets arising from the review of the 2020/2021 budget that saw the target for the year set for URA revised from 22 trillion Shillings to 19.7 trillion Shillings to respond to the imminent effects of the COVID-19 pandemic.

The revision followed arguments that the budgetary provisions had been made before the full effects of the pandemic were gauged and this could lead to erroneous budgeting and budget implementation. In the budget, areas like health, security and SMEs had their allocations increased, while the government also announced that some taxes would be suspended or deferred to help mitigate the effects of the pandemic on investments.

This, together with the slowdown in personal incomes as well as a slowdown in business activities led to the revision of the target downwards. The surplus gives hope to the tax body that the target will be met. More than three-quarters of the revenues were from the five top revenue sources, with wholesale and retail trade leading with 30.66 per cent, while revenues from manufacture accounted for 23.17 per cent, ICT 9.3 per cent, financial and insurance services 7.69 per cent and public administration 5.6 per cent.

The sectors that recorded the highest growth rates as revenue sources were manufacture ring, ICT and wholesale, according to the quarterly revenue performance report. Sectors that were highly affected by the pandemic and the measures against the spread also recorded the biggest decline in revenue collections. Accommodation and food sector topped with a decline of almost 59 per cent, followed by education, arts, entertainment and recreation, as well as water supply.

The Commissioner-General John Musinguzi Rujoki expressed fear that the coming quarter might be harder but added that the commission and the economy as a whole will be more resilient.

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The URA says they will continue strengthening the digital platforms like assessment and payment systems, surveillance and tracking systems among others, to ensure better tax management. But the Commissioner for domestic taxes Abel Kagumire urged taxpayers to take advantage of the peaceful avenues that have been put in place for taxpayers who my find issues, including settling out of court as well as voluntary disclosures.

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