Tax challenges persist in Uganda as domestic revenue falls

Uganda’s Ministry of Finance, Planning, and Economic Development revealed that the government faced a deficit in domestic revenue of Shs394.60 billion in December 2023. The country’s tax administration faces certain issues, as domestic revenue collections continue to decline.

Details of the revenue shortfall was revealed in the Ministry’s economic report for December 2023.

• Uganda faced a Shs394.60 billion revenue deficit in December 2023.
• Tax collections declined, with an 11% revenue shortfall reported.
• Major tax categories, including international trade transactions, fell short of targets.

The details of the revenue decline were seen in the Ministry’s economic report for December 2023, according to the Ugandan news publication, The Monitor.

In the report, released on Wednesday, the ministry revealed that the domestic revenue collections for December 2023 totaled Shs3.059 trillion against the initial target of Shs3.453 trillion, highlighting a shortage of around 11%.

The report showed that both tax and non-tax revenue fell short of their targets during the period under review.

“Tax revenue collection amounted to Shs2.902 trillion against a target of Shs3.268 trillion, translating into a shortfall of Shs365.79 billion. All the major tax categories registered shortfalls during the month,”-  the report read.

The largest shortcomings came from taxes on international trade transactions with a deficit of Shs 226.67 billion, which amounted to Shs761.50 against a target of Shs988.16 billion.

“This underperformance is partly attributed to the realized import (on which VAT and excise duty are charged) being less than those projected for the month. This resulted in import duty, excise duty, and VAT on imports as well as infrastructure levy all being lower than projected for December 2023,” – the Ministry of Finance relayed.

During the month, indirect domestic taxes came in at Shs547.21 billion against a target of Shs651.79. Additionally, VAT and excise tax fell below the intended revenue owing to complications in the tax administration.

Source: africa.businessinsider.com

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