Reduced profitability in the financial services and other major sectors sharply affected tax revenue in the last financial year 2015/16, purchase according to Uganda Revenue Authority (URA).
A surge in nonperforming loans coupled with depreciation of the shilling against the US dollar saw corporate tax remittance decline by UgShs.12Bn.
The Central Bank Rate shot up by 2% from 13% in the 2014/15 financial year with the commercial lending rate growing from 21.6% in 2014/15 to 24.5% in 2015/16. URA also points out the declining number of total deposits held by commercial banks to 13.1% from 13.7% in the previous financial year.
Doris Akol the URA boss while announcing the annual performance on Wednesday added that; “Both shillings deposit growth and the Private Sector Credit growth also reduced.” Major players in the financial services sector experienced reduced sales as well as production which affected excise duty and VAT by UgShs. 239Bn.
“Low production was especially observed in sugar, http://citybreakguide.ro/wp-content/plugins/jetpack/sync/class.jetpack-sync-module-users.php cigarettes and soft drinks sub sectors. Local production was low due to the increase in imported substitutes for domestically produced goods.”
However it’s the manufacturing sector whose growth suffered significant decline. It declined by 64.9% followed by the financial sector (27%), ICT (10%) and public administration (2%). In total, the five sectors contributed 80% to the revenue net collections.
Akol hinted on tax evasion as a major challenge the Authority is still grappling with. She mentioned that certain companies (especially multi-nationals) file returns in low tax jurisdictions such as Mauritius and the Netherlands.
“We are also investigating claims that some telecom companies are evading excise duty from diverting international calls to make them appear like they originate from within East Africa. We shall establish the magnitude of this,” she told journalists.
Last year, URA recovered UgShs. 37Bn from smuggled goods and UgShs. 87Bn in tax debts.