Tax revenue collection: URA misses target by Shs 252bln in March

KAMPALA-The Uganda Revenue Authority [URA] which collects tax revenue on behalf of the central government missed the Shs 2 trillion target in March 2023, by about Shs 252bln, according to the latest Performance of the Economy Monthly Report published by the Finance Ministry.

According to the report, all the three major tax categories registered shortfalls during the month of March. Direct taxes registered a shortfall for the first time this financial year amounting to Shs 67.85bln. This followed an underperformance of corporate tax which was short by Shs about 60.3bln and withholding tax which was short by Shs 22.9bln both of which more than offset the surpluses registered for pay-as-you-earn- PAYE [Shs 29.32bln] and rental income tax [Shs 1.73 billion].

Similarly, indirect taxes were also short of the target for the month by Shs 45.3bln as both excise duty and value added taxes [VAT] were lower than targeted by Shs 4.12bln and Shs 41.18bln, respectively.

The report adds: “The major reason for the underperformance of both direct and indirect domestic taxes was the level of economic activity, which albeit improving, was lower than what had been projected for this period at the time of setting the targets. As a result, the projected profitability for firms as well as projected demand for goods and services turned out lower than expected, which negatively affected performance of corporate tax, VAT and excise duty.”

However, according to the report, the largest shortfall in tax revenue was registered under taxes on international trade transactions. The amount collected under this category was Shs 733.60 billion against a target of Shs 867.8bln, posting a shortfall of Shs 134.2bln. “This followed lower than projected volumes of imports such as petroleum and others. As such, petroleum duty, import duty, excise duty on imports and VAT on imports all underperformed during March 2023.”

Government expenditure

Meanwhile, total government spending in March 2023 amounted to about Shs 2.8 trn which was higher than the planned Shs 2.71 trn for the month. “The higher spending was mainly registered under the recurrent category which was above its plan for the month by 23.5 percent”.

Expenditure on non-wage recurrent items explained this performance as most government agencies exhausted their funds for Quarter three while completing their quarterly work plans for this period, the report says

The report says development expenditure performed below the plan for the month mainly due to externally financed development projects which were less than the planned budget by 33.8 percent.

“Performance of this category is hinged on the disbursement of funds by development partners and does not reflect the physical progress of the projects. The domestically financed development projects performed at 99.3 percent of the plan for the month,” the report adds.

https://thecooperator.news/ura-urged-to-intensify-tax-education-campaigns/

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