1. vada presentation ENHANCING VAT COMPLIANCE management
John Tinka Katungwensi
15-June 2016

2. Table of Content. Introduction Registration Filing & Reporting.
Payment & Others
Conclusion
Q&A
Refresher Training in registration
Register cleaning guidelines

3. Presentation on Enhancing VAT COMPLIANCE
Introduction
The VAT was introduced in Uganda in July 1996 to widen the tax base substantially by;
bringing all supplies of goods and services within the tax net; and
significantly expanding the number of enterprises liable for the tax.
VAT replaced sales tax and the Commercial Transaction Levy (CTL) to broaden the tax base.
VAT is a tax on consumption( indirect tax)
This implies that VAT should be imposed on all supplies of goods and services (GDP) if there are no exemptions.
Monday, May 14, 2018
Presentation on Enhancing VAT COMPLIANCE

4. Presentation on Enhancing VAT COMPLIANCE
Introdu…..
VAT is imposed on both local and imported goods and services.
Currently, the VAT standard rate is18%. However, there are exempt and zero-rated supplies.
Exempt supply, the supplier of goods/services does not charge VAT on sales and does not claim VAT refund.
Suppliers of zero-rated goods/services do not charge VAT but can claim a refund( majorly exporters)
VAT threshold is Ushs 150million( 42,680 US dollars)
This implies that any business with a annual turnover of Ushs 150million above is required to register for VAT and comply with the VAT law.
VAT is administered by the VAT Act 1996 as amended.
Monday, May 14, 2018
Presentation on Enhancing VAT COMPLIANCE

5. VAT Compliance Management
Compliance broadly means meeting Legal obligations imposed by a legal tax system
Thus in Uganda,VAT compliance means complying with the provisions of the VAT Act CAP 349 of the laws of Uganda.
These provisions require one;
To register
File returns
Pay and
Maintain records.
In Uganda VAT compliance gap is averaged at 60% (IMF).Hence need to enhance VAT compliance.
Monday, May 14, 2018
Presentation on Enhancing VAT COMPLIANCE

6. Why enhance compliance management
To increase revenue collections.
To reduce VAT administration costs.
To impact taxpayer behavior.

7. VAT complianceManagement entails..
Registration
Sections 7 & 8 of the VAT Cap.349 provide details on who and when one should register.
VAT registration now can be done anywhere by completing and submitting an online application form.
No payment is required for one to apply for registration.
URA has placed offices with staff in every major town to assist applicants. .
The URA team also educates applicants on the obligations that arise to a VAT registered persons.
Refresher Training in registration
Register cleaning guidelines

8. Register Growth…

9. VAT Registration challenges.
Taxpayers are trading without being VAT registered.
Computer illiteracy
Manpower challenges( new staff/numbers)
Some lack expertise in using the URA etax system.
Lack of a reliable internet access.
Limited resources for taxpayer sensitization
Informal sector( will talk about it later)
Monday, May 14, 2018
Presentation on Enhancing VAT COMPLIANCE

10. REMEDIES TO REGISTRATION CHALLANGES
Tax payer services through;
Tax-hubs, radio talk shows, contact centres
Post registration activities
Tax Register expansion project(TREP) through collaborating with government agencies( stakeholders)
Interface of etax system with IFMS,NSSF etc
Requirement of TIN for government suppliers

11. VAT compliance Management also entails..
Filing
Initially filing was manual
As part of the reforms to improve compliance, filing of returns is currently done online
Due date for filing is by the 15th day after the end of the tax period
Refresher Training in registration
Register cleaning guidelines
Monday, May 14, 2018
Presentation on Enhancing VAT COMPLIANCE

12. Filing Ratios .
Source: URA database

13. Payments Vs Offsets & Refunds
Source : URA Database

14. Filing & Reporting Challenges.
Non and nil filers
Failure to apportion input tax( mixed supplies)
Misclassifications of supplies between taxable and non taxable.
Claiming tax when not incurred.eg on imports.
Failure to report sales( sales suppression)-
HNWIs evade tax by hiding assets in loss making companies and hide incomes in the expenses.
Business to consumer transactions; e-commerce,I ssuance of receipts etc
Refresher Training in registration
Register cleaning guidelines

15. Remedies to filing &Reporting challenges
Sending reminders to non-filers after the due date
Issuing estimated assessment to non filers
Penalising late filers
Auditing
VAT deactivation
Returns examination( Advise to amend returns)
Using third party information
Issuing modified returns advices
Deregistering perpetual non and nil filers.
We have increased the VAT threshold from 50 to 150m.
A unit has been created in LTO to handle HNWIs
Client relationship manager (KYC)for the big Taxpayers( LTO,MTO,STOs)

16. Payments. Tax is due when the return is due.
VAT compliance can also be measured in terms of payment made on time.
Tax is due when the return is due.
Refresher Training in registration
Register cleaning guidelines

17. Payment Challenges Payment challenges. Late payments. Non Payment.
Government guarantees. i.e.
biggest consumer of good and services
Leadership

18. VAT COLLECTIONS COMPAIRED TO TOTAL COLLECTIONS
Empowering advocates for strategy execution

19. Strategies to improve payments
Matching returns and payments( Compliance calander)
Reminders to defaulters demanding payments
Charging interest on due payments
Educating clients (numerous payts)
Issuing agency notices to third parties
Submission to Debt collection unit
Ensuring a reliable payment mechanism
Over 23 commercial banks and mobile money

20. Auditing
On average 4000 taxpayers are audited every year through comprehensive, issue and desk audits
Audits are carried out on a priority sector/risky sector basis
Audit case selection and auditing is done using the e-tax system
Challenges;
Manpower challenges( numbers, skills)
Limited resources

21. Audit Strategies.
Use improved approaches to Taxpayer compliance management such as systematic risk assessment and automated checking and debt management
Carry out more desk audits.
Focus on the most risky sectors.
Audit as many off setters as possible.
Audit using the system.
Staff capacity building

22. Tax administration systems/Processes
Etax system
Filing & payments done using the system
Audits are done on the system
Feedback mechanism for every transaction
Simplified, transparent and automated procedures(To check on corruption)
Tax exemptions/tax amnesties/Write offs
Objections and appeals ( TAT, Commercial court ,etc)
Monday, May 14, 2018
Presentation on Enhancing VAT COMPLIANCE

23. The informal Sector.
A large section of the business community is informal and accounts for 49% of the GDP.
The informal sector is characterized by ;
Poor record keeping
No permanent place of abode
Mainly employs relatives
Poor reporting structures
Poor financial management
Illiterate or semi illiterate proprietors

24. Strategies to tap the informal sector.
TREP through collaborating with tax gov’t agencies
Simplified payment platforms like easy money & mm
TIN campaigns like Tin bonanza .
Introducing advance tax for certain categories of businesses( commercial vehicles)
Sensitization campaigns & workshops
Requirement of TIN for expenses incurred which are/ above UGX. 5M( US$)

25. Presentation on Enhancing VAT COMPLIANCE
Conclusion
We need to keep focusing on;
Providing taxpayer services;
Simplifying the tax laws and processes.
Tax education (how to register, keep books of accounts, file and pay taxes due);
Committing more resources to Audits; and
Developing leaders to inspire others
Engaging stakeholders( stakeholder management)
To enhance compliance.
Monday, May 14, 2018
Presentation on Enhancing VAT COMPLIANCE

26. Thank you