Uganda Revenue Authority

1
Uganda Revenue Authority

• Possibilities for facilitating graduation of SMEs
  into the standard regime

Allen Kagina akagina_at_ura.go.ug
2
Presentation Outline

• Introduction
• Policy opportunities to reduce the obstacles for
  migration into the Standard Regime
• The role of administrative support measures to
  prepare larger SMEs for migration into the
  standard regime
• Importance of improving SME bookkeeping for
  facilitating migration
• Administrative approaches to ensure that growing
  SMEs dont continue hiding in the simplified
  regime.
• Recommendations

3
IntroductionImplications of a Large SME Sector

• SMEs withdraw resources from the formal economy
  by enjoying certain public goods without paying
  for them
• Over 2/3 of the income earned in the informal
  sector is spent on goods and services provided by
  formal economic activity
• Creates a indirect loss of revenue stemming from
  unfair competition
• May cause the decline of honest firms that
  contribute directly to tax revenue
• Makes the tax system opaque and its
  redistribution effects more uncertain (inequity)

4
Policy opportunities to reduce the obstacles for
migration into the standard regime

• Initiate a Favourable alternative Systems of
  taxation with a single tax rate. Applicable
  where -
• Similar economic structures exist
• Similar business type, tax type, location e.t.c
• Introduce Presumptive tax/Standard Assessment
  (minimum/fixed lump sum tax rates)
• Graduated Business License Fees Use of Business
  License as an instrument of income taxation

5
Policy opportunities Cont

• Remove legal impediments Institute softer
  special legal requirements e.g.
• Submission of Accounts,
• Registration Requirements,
• Use of Private Accountants Auditors,
• Create Incentives at the formal level/Standard
  regime (Refunds, allowable deductions, access to
  credits/loans e.t.c
• Raise Tax Thresholds to ease compliance
  monitoring attract SMEs into the standard
  regime

6
Administrative Support Measures to facilitate
migration

• Tax Awareness/Education clinics - Rights
  obligations
• SMEs managed through Structural groupings
• Easy compliance monitoring,
• Targeted service delivery
• High level customer care (Client relations
  Managers)
• Reduce compliance costs (forms, signatures,
  returns period
• Improve process efficiency Service Delivery,
• Improve integration and coordination of business
  processes,

7
Administrative Support Measures to facilitate
migration

• Set-up SME Tax Administration offices in central
  business regions for easy monitoring migration
  with administrative structures to manage
  nurture SMEs e.g. LTO, MTO, STO,
• Improved accountability and delivery of
  Government Services (long term)
• Simplicity of tax system to encourage acceptance
• Partnership with Local authorities,
  associations, business associations

8
Importance of Improving SME bookkeeping to
facilitate migration into the simplified regime

• Lowers the Tax burden by authenticating
  deductions Input Tax Credits
• Enhances management of the financial health of
  the business fosters growth of SMEs into
  standard regimes
• Simplifies imposition of Presumptive/alternative
  tax rates
• Provides opportunities for easy access to credit
  facilities (Investment and growth)

9
Administrative approaches to ensure that
growing SMEs dont continue hiding in the
simplified regime.

• Segmentation of Taxpayers
• Improved compliance monitoring
• Improved Service delivery
• Improved efficiency effectiveness
• Sub segmentation
• Sectors (Construction, Manufacturing,
• Risk profiling
• Phased Migration Approach with clear criteria
  (Turnover/Tax paid)

10
Administrative approaches to ensure that
growing SMEs dont continue hiding in the
simplified regime.

• Improved Compliance monitoring - Integrated
  systems
• Integrated Tax Administration System (ITAS)
• Cross Functional departmental Inter linkages
• Improved Risk management - Compliance Model

11
Segmentation The URA Experience

• Improved compliance monitoring of SME s
  graduated into LTs

12
Segmentation The URA Experience

• Higher growth at the Top Segment in Revenue
  Collections (LTO Collections)

13
Recommendations

• Adopt Customized Presumptive Tax Systems that
  are suitable for the respective countries
• Develop a phased approach to graduating SMEs to
  simplified tax regimes
• Use Segmentation / sub segmentation approach in
  managing creating sustainability
• Apply Risk Management Techniques in managing the
  segments
• Improve and Simplify processes
• Improve Service Delivery
• Introduce Taxpayer Education
• Create strategic partnerships with stakeholder
  agencies, associations and SME groupings

14
Thank You !!!