Henry Saka, Commissioner of Domestic Taxes at the URA

1. The public sector as a taxpayer
segment: why is it relevant?

2. Developing Uganda Together
Table of Contents
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5
3
4
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What is the public sector?
Why is it important?
URA’s Public Sector Office
The impact of PSO - success or failure?
How do we explain this performace?
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Conclusion / Recommendations6

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1. What is the public sector?

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The public sector
Includes
• The three arms of
Government (executive,
legislature & judiciary)
• Local government
• Semi-autonomous entities
(such as the URA)
• Entities that receive
government appropriations
Does not include
• Entities that operate like
private business (e.g.
NSSF, NDA)
• Limited liability entities
owned by government
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Taxpayer segmentation in Uganda
No segmentation
- Tax types under
different leaders
1991
1998
2009
Large taxpayers
- Two segments:
LTD and Others
- LDT a separate
department
Medium sized
taxpayers
- All segments are
units under DTD
(LTD was
dropped in was
replaced by an
office with DTD
in 2001)
- MTO is
centralised,
similar to LTO
2014-15
“Next Gen“
segments
- LTO
- MTO
- Public Sector
Office
- HNWI‘s
- VIPs

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Taxpayer segmentation in Uganda
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Segment No. of taxpayers % of
register
Large taxpayers 719 0.07%
Public Sector 992 0.09%
Medium sized 1,663 0.16%
Small taxpayers 1,054,189 99.68%
PSO includes HNWIs and
VIPs

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2. Why is the public sector important?

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The administrative issues in July 2014
• Administrative VAT gap 50-60%
• TADAT assessment highlighted significant weaknesses
– Accuracy and reliability of our register (including LTO)
– Risk and risk responses
• An Insufficient focus on large taxpayers (TADAT and other TA)
• A record deficit in F/Y 2013-14
– Static growth in PAYE and withheld taxes
– VAT
• Government tax arrears written off!
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Government and the LTO
• A significant %ge of the LTO register by June 2014, but
– Very different behavior characterized by no tax planning,
ignorance or outright evasion
– Organization arrangements are different / unique
– Required officer skills-set is different
• Government was largely being ignored
– Few inspections or audits
– Debt collection abandoned – perceived as not yielding results
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Government and the small taxpayer offices
• Largely disguised the performance of performance
(M&E) of these offices
– Revenue targets for these offices largely driven by the previous
year’s performance… plus a markup
– Previous years performance largely based on collections of taxes
withheld by government (PAYE, WHT)
– Govt. accounted for >90% of revenues in some offices
• Therefore no focus on business and property taxes
– No tax register expansion
– No compliance improvement activities
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Government and private business
• The biggest buyer in the economy… who does not pay!
– Growing domestic arrears
– VAT distorting practices
• And yet squeezing business out of the credit market
– Biggest source of income for private banks is interest on treasury bills
– High interest rates
• Business not paid & unable to borrow, therefore no tax
• Government was contributing to the gray economy
– To TIN on transactions
– Malpractice in government contracting
– Audit queries: failure to collect taxes from business receiving govt. payments
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What we needed to do
Govt. as a taxpayer
• Clean the register
• Educate them; rights and
obligations
– Create awareness
• Monitor normal flows
– PAYE, WHT
• Discourage arrears
Govt. as a player in the econ.
• Relate govt. contracts
with business
• Monitor releases
– Advise PS-ST on
expenditure pattern
• Ensure no default on
VAT
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3. URAs Public Sector Office (PSO)

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Assistant
Commissioner
Compliance
Manager PSO
Supervisor
Ministries,
Departments, LGs &
Projects
8 x Officers
Supervisor Self
Accounting entities
(+ HNWIs/ VIPs)
8x officers
Supervisor
Enforcement, &
Reporting
6 x officers
In 2015-16 we added the
administration of VIPs and
HNWIs
Taxpayer Category 2014/2015 2015/2016 2016/2017
Taxpayer register 381 666 981
No. of operational staff 7 17 26 (44)
Staff to taxpayer ratio 1: 55 1:39 1:38

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What do they do?
Govt. as a taxpayer
• Clean the register
• Educate them; rights and
obligations
– Create awareness
• Monitor normal flows
– PAYE, WHT
• Discourage arrears
Govt. as a player in the econ.
• Relate govt. contracts
with business
• Monitor releases
– Advise PS-ST on
expenditure pattern
• Ensure no default on
VAT
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4. PSO’s impact since 2014

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Significantly improved revenue performance
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Revenue collections (UGX
Bns) % DT Share Growth rate
Segments 2014/15 2015/16 2016/17 2014/15 2015/16 2016/17 2015/16 2016/17
LTO 3,186.63 4428.15 4,330.43 67.3% 67.1% 57.9% 39.0% -2.2%
PSO 213.5 627.58 1,290.88 4.5% 9.5% 17.3% 193.9% 105.7%
MTO 494.45 775.68 929.45 10.4% 11.8% 12.4% 56.9% 19.8%
STO 838.21 763.53 929.63 17.7% 11.6% 12.4% -8.9% 21.8%
Total Gros
s Domestic
4,732.79 6,594.95 7,480.40 100.0% 100.0% 100.0% 39.3% 13.4%

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Awareness and enforcement impacts
declarations
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100
150
200
250
300
350
NumberofTaxpayers
PAYE return filing trends
Filed on time
Filed late
Not filed
Linear (Filed on time)

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Awareness and enforcement impacts
declarations
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50
100
150
200
250
300
350
NumberofTaxpayers
WHT return filing
Filed on time
Filed late
Not filed
Linear (Filed on time)
Linear (Not filed)

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Quality of register and declarations
• The register is certain… and bigger
• PAYE performance: increase in declarations received is
marginal, but:
– Number of employees significantly increased
– Benefits in kind considered
• Registration of business that transacts with Government
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Not yet measured but felt…
• Domestic arrears
– Impact on VAT
– Impact business cash flow and therefore payment of all other
taxes
• Declarations by government contractors
• Public sector accountability
• Government exemptions
– Deemed VAT (unfortunately)
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New assignments
• VIPs
– They tend to be government officials
• High net worth individuals
– They tend to be VIPs, or are related to VIPs…
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5. Why has it been successful?

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• Management support
– engagements with the officials
– Authorization of changes (structure, facilitation, etc.)
• Support of senior government officials
– MoF / PS-ST
– Commissioner Local Government Administration
• Engaging stakeholders
– Local politicians (#RollsEyes)
– Accounting officers
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29. Developing Uganda Together
Thank you!
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