Tax authority catches a cold as Uganda economy sneezes

Traders in a downtown Kampala market. Tax revenues for 2015/16 were below target, reflecting the slowing economy. Photo: Uganda Business News
Traders in a downtown Kampala market. Tax revenues for 2015/16 were below target, reflecting the slowing economy. Photo: Uganda Business News

Uganda Revenue Authority missed its tax collection revenue target by Shs404.54 billion in the 2015/2016 financial year that ended in June, putting a number to the extent of the slowing economy.

URA Commissioner General Doris Akol said tax collections were Shs11.23 trillion against a target of Shs11.63 trillion on the back of “hard economic times characterised by reduced import volumes, depreciation of the shilling and relatively subdued investor confidence due to the election period early this year”.

The tax revenue numbers released this week follow the release of data from the Uganda Bureau of Statistics showing that real Gross Domestic Product fell 1.3% year-on-year in the third quarter of financial year 2015/2016, compared to a 2.1% growth in the second quarter.

The slower growth was mainly attributed to lower earnings from processed agricultural products, which fell 6% compared to a 2.2% growth in the second quarter. Value added in the services sector also declined 0.2%, compared to an increase of 3.1% in the previous quarter.

Overall, GDP growth fell from a projected 5.4% to 4.6% in the financial year while the shilling depreciated by 14.2% against the dollar.

The conflict in South Sudan also hit Uganda’s tax revenues, with tax revenues from exports, most of which go to the northern neighbour, dropping from Shs43.5 billion before the war to Shs9.2 billion in the 2015/2016 financial year.

Corporate tax revenue collections were down by Shs12 billion in what URA officials say reflected the hard times faced by many private sector companies in the country.