East African Business Week

KAMPALA, UGANDA- The telecom price wars that rocked Uganda early this year, have cost the Uganda Revenue Authority which failed to hit the value added tax target that was expected from the sector, a senior URA official told reporters in Kampala.
Mr. Moses Kajubi, the Commissioner Domestic taxes explained that VAT collections from electricity, phone talk airtime and other goods and services fell short of their target by Ush147.9b (about $59.2m).
"In the telecommunications sector, revenue collections on phone talk airtime were affected by increased inputs costs resulting from investment in network upgrades by major contributors.
"Similarly, cement revenue collections fell short of the target due to increased investment in capacity expansion at both Hima and Tororo Cement which increased their input taxes and reduced their final taxes submitted," indicated Kajubi.
Kajubi blamed the poor revenue collection performance of indirect domestic taxes to the below par collection from phone talk airtime due to the price wars in the sector that led to reduction of call rates and other goods and services whose consumption is thought to have reduced due to the high commodity prices.
The Excise duty and VAT from the telecommunications sector registered a shortfall of Ush2.63b and Ush2.75b respectively.
However, Kajubi was happy that the net revenue collections for August surpassed the Ush452b target, posting a surplus of Ush33.5b to count at Ush485.3b. The Gross Domestic Tax revenue for the month was Ush245b against a target of Ush225.5b registering a surplus of Ush19.2b.
He gave the reasons for the positive August revenue performance as a surplus in Pay As You Earn that he attributed to new more recruits in some firms which resulted into increased collections of Ush1.53b.
"Audit recoveries of Ush21.5b boosted withholding tax collections, the growth in the value of dutiable imports by 35% and a favorable import tariff mix all had a positive impact to our performance," he stressed.
VAT imports also increased by 47.5%, the performance resulted into a surplus of Ush7.92b on VAT on imports.
Kajubi added that power companies, that continued to accumulate tax arrears, also affected the performance of the sector, leading to a tune of up to Ush6.4b owed by the sector in VAT payments pushing the cumulative debt to Ush60b.
URA net collections for 2010/11 surpassed the set target by 101.6%. The total collections amounted to Ush5114.2b against a target of 5,034.37b registering a surplus of Ush79.82b. It represented a 22% growth compared to 2009/10.
"The lower than projected performance of local excise on sugar is attributed to the continued low domestic production that has resulted into lower sales volumes.
"Production was 15,437 metric tones compared to the projected output of 32,640 metric tones resulting into a shortfall of 17,203 metric tones while sales of locally manufactured sugar declined by 83.6%," said Kajubi.
Kajubi also warned landlords with tenable houses who evade property tax that the authority will recover all the evaded tax after clear information and duration from when the tenants have been occupying the houses.