COUNTRY CORRESPONDENT

Silajji Kanyesigye

UGANDA

IMPLEMENTATION OF THE TAX PROCEDURE CODE ACT

The Uganda Revenue Authority (URA) commenced administration of domestic

taxespursuant to the Tax Procedure Code (TPC) Act 2014 on 1st July 2016. The
TPC is an Act providing for a Code to regulate the procedures for the administration
of specified tax laws in Uganda. This Act is aimed at;

Providing uniform procedures for administering the tax laws for the
promotion of consistency and efficiency
Harmonizing, consolidating and streamlining tax procedures into a single
law in order to simplify tax administration and promote compliance for
instance the primary Income Tax and Value Added Tax Acts are catered for
under this Code.

The TPCis applicable to all domestic tax heads and has introduced various legal
provisions with implications across all modules in administration of tax namely;
Registration, Returns, Assessments, Audit, Objections and Appeals, Debt Collection
and Tax Accounting.

Key among these is establishment of a Tax Agent Registration Committee (TARC) to

register sufficiently qualified Tax Agents who competently guide taxpayers and
handle their issues with top notch professionalism. Furthermore, taxpayers with a
turnover exceeding Uganda Shillings 500 million ($139,000) must audited by an
independent auditor licensed by the Institute of Public Accountants of Uganda
(ICPAU).

UGANDA PRESSES FOR ENHANCED TAX COMPLIANCE IN THE PUBLIC

SECTOR

The Uganda Revenue Authority (URA) is moving to improve tax administration

within government entities and a unit under the Domestic Taxes Department has
been instituted to this effect. This unit, the Public Sector Office (PSO), is now
mandated with ensuring that Central and Local Government units fulfil their
obligations of timely filing and payment of tax. This was created after realising the
government is one of the biggest taxpayers and their compliance behaviour is
unique and different from other taxpayers.

This office offers high quality service with utmost efficiency in order to curb tax
leakage within government and its stakeholders for instance contractors for public
works and infrastructure.

The jurisdiction of the PSO has expanded to include High Net-Worth Individuals
and Very Important Individuals (VIPs) principallybecause a considerable number of
these individuals are government officials or government contractors and or they
influence policy including tax. Close monitoring of these government entities and
individuals coupled with continuous tax education of accounting officers is already
yielding dividends, contributing a cumulative average of 24% to domestic tax
revenue for the Financial Year 2015-16.

Therefore taxpayer segments in Uganda now are:

Large Contributes
Taxpayers 59% of DT
Revenue
Office

Public Contributes
Sector 24% of DT
Revenue
Office

Medium Contributes
Taxpayer's 10% Of DT
Revenue
Office

Small and Contributes

MIcro 7% of DT
Revenue
Taxpayers

TAXING THE INFORMAL SECTOR

The URA is finally making inroads in the taxation of the informal sector in
Ugandas economy. The informal sector encompasses business ventures
predominantly founded and run by individuals with minimal to no registration or
regulation by the authorities. This sector has for a lengthy period of time posed
challenges to the tax authority owing to a broad failure to understand the nature of
the trade, its proprietorship and the widespread use of cashwhich hamperstrailing
of transactions.

The Taxpayer Register Expansion Programme (TREP), a door to door expansion

drive aimed at registration of businesses with URA, local authorities and the
registration bureau was rolled out across the country in July 2016. This will go a
long way in ensuring majority of businesses in these townships is registered and
traceable by the authorities.

Furthermore, to ease declarations, presumptive returns were rolled out, combining

the processes of payment and filing for taxpayers whose annual gross turnover is
Uganda Shillings 150 million ($41,700) and below. When such a taxpayer registers
a payment for a given period, a corresponding return is automatically filed.

URA has noted that the informal sector is not only about the volume of sales but
myriad pertinent factors for instance level of education, ability to keep records and
coverage of financial institutions. While our laws on presumptive taxpayers used
size of turnover, the fishing industry as a major contributor to Ugandas exports
has a different story. A host of fishermen in the fishing villages are neither
registered nor are their activities regulated, increasing on the size of the informal
sector. A study of the industry by the Domestic Taxes Departmenthas revealed that
the fish mongers double as fish suppliers to the fish processing factories and local
consumer markets. The turnover of these fish mongers is outside the bracket of
presumptive, but due to low levels of literacy, they are unable to prepare books of
accounts. Some of them have turnovers exceeding USD 3 million in a year.
Engagements with them have revealed that we may need to use turnover tax on
them despite their turnover. The Domestic Taxes management has agreed with the
leaders of the fish mongers to register for taxes and pay a fixed sum per kilogram of
fish supplied. The fixed sum will be discussed and agreed at the commencement of
the financial year and reviewed annually until we get a proper regime or get the
players to file normal tax returns.

We are looking at this being a new approach to penetrating the informal sector
under cooperative compliance if we are to get the majority of the informal ventures
in the tax bracket.

The success of this approach is helping us to penetrate other informal sectors like
out growers for Tea, sugar cane, coffee, Diary and other mainly agriculture oriented
sectors.

UGANDA EMBRANCES THE TAX ADMINISTRATION DIAGNOSTIC

ASSESSMENT (TADAT) TOOL

The URA has hosted two TADAT workshops since the beginning of the Financial
Year. The first workshop was held in August 2016 and the second specifically
meant for members of Senior Management in October. Officials from Ugandas
Ministry of Finance and the Rwanda Revenue Authority (RRA) were present at both
functions and the one in August, respectively. These workshops were followed by
examinations on TADAT methodology.

TADAT is an evidence based tool designed to furnish a homogenised,

comprehensive approach to assessing the health of a countrys tax administration
system in context of best practice internationally. It is comprised of nine
Performance Outcome Areas (POAs) that encompass processes, responsibility
centres and their functions in a tax administration system. These POAs broken
down into indicators and dimensions are detailed in a standardised Field Guide
that aids assessors in applying the TADAT methodology.

Following the success of the two workshops facilitated by Mr. Justin Zake and the
team from the TADAT Secretariat, URA is taking further steps to share this tool
across the organisation. Members of middle management and officers have duly
been trained to foster and maintain a uniform standard in revenue administration.
The training also helps to lend clarity to URAs short and long-term objectives,
clearly stated in the organisations Corporate Plan which feeds directly into the
National Development Plans.