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Enhancing Taxpayer Registration with Inter-Institutional Data Sharing – Evidence from Uganda
De petits filets pour de gros poissons ? Imposition des plus riches – l’exemple de l’Ouganda
Taxer les personnes les plus riches est un objectif prioritaire pour toute administration fiscale... more Taxer les personnes les plus riches est un objectif prioritaire pour toute administration fiscale, et plus encore en Afrique, où les recettes fiscales sont insuffisantes pour financer le développement. En raison de l’évasion fiscale et des capacités fiscales limitées, l’impôt sur le revenu des personnes physiques est largement sous- performant sur l’ensemble du continent (Moore 2020). Les preuves de l’évasion généralisée pratiquée par les plus riches dans les pays développés – par le biais de systèmes d’évasion sophistiqués et agressifs – ont été bien documentées dans les ouvrages académiques. En revanche, les politiques susceptibles d’être efficaces pour l’imposition des riches en Afrique sont très peu connues, probablement parce que très peu de pays ont mis en place des unités dédiées à l’imposition des plus riches. Cette étude, réalisée en collaboration avec l’autorité fiscale ougandaise, est la première du genre à étudier l’impact du lancement d’une unité spécifique de l’autorité fiscale ougandaise (URA) pour les contribuables les plus riches. Résumé du document de travail 143 par Fabrizio Santoro et Ronald Waiswa.
De petits filets pour de gros poissons ? Imposition des plus riches – l’exemple de l’Ouganda
Taxer les personnes les plus riches est un objectif prioritaire pour toute administration fiscale... more Taxer les personnes les plus riches est un objectif prioritaire pour toute administration fiscale, et plus encore en Afrique, où les recettes fiscales sont insuffisantes pour financer le développement. En raison de l’évasion fiscale et des capacités fiscales limitées, l’impôt sur le revenu des personnes physiques est largement sous- performant sur l’ensemble du continent (Moore 2020). Les preuves de l’évasion généralisée pratiquée par les plus riches dans les pays développés – par le biais de systèmes d’évasion sophistiqués et agressifs – ont été bien documentées dans les ouvrages académiques. En revanche, les politiques susceptibles d’être efficaces pour l’imposition des riches en Afrique sont très peu connues, probablement parce que très peu de pays ont mis en place des unités dédiées à l’imposition des plus riches. Cette étude, réalisée en collaboration avec l’autorité fiscale ougandaise, est la première du genre à étudier l’impact du lancement d’une unité spécifique de l’autorit...
Systems for registering taxpayers in sub-Saharan Africa are often poorly designed and managed. Th... more Systems for registering taxpayers in sub-Saharan Africa are often poorly designed and managed. There are three characteristic problems: the process of registering new taxpayers is not sufficiently targeted on the people and businesses likely to be liable to pay tax; too many (nominal, unproductive) taxpayers are registered; and taxpayer identification (ID) details in the tax register are inaccurate. These problems interact perversely-each exacerbates the others. They will all to a large degree be solved, almost naturally, as a result of: (a) greater digitisation of tax administration generally, and (b) further interfacing between the digital systems of tax agencies and those of other (public sector) organisations, notably cross-government ID databases. But this takes time. There are significant shorter-term registration problems that need policy attention. In part they have not received it yet because these problems are rare in richer countries, which still exercise a huge influence on the tax reform agenda in Africa and other low-income regions. On the basis of recent experience in a range of African countries, we list some taxpayer registration practices that should be abandoned or used sparingly, and some that should be used more widely, to better target registration on those businesses and individuals who should be paying tax.
How to improve tax compliance by wealthy persons? Evidence from Uganda
Development Policy Review
MotivationAppropriately taxing the richest is a priority for African governments which need tax r... more MotivationAppropriately taxing the richest is a priority for African governments which need tax revenues to invest and pay for public services. In Uganda, the revenue authority launched a unit in 2015 to monitor the tax affairs of high net‐worth individuals (HNWIs) and very important people (VIPs), 393 persons in all. The unit combined persuasion, assistance, and enforcement.PurposeWas the unit able to improve tax compliance by the rich?Methods and approachIn collaboration with the Uganda Revenue Authority, this study builds on taxpayer‐level data on tax filing and payment. The analysis employs a standard difference‐in‐difference framework, exploiting the timing of the launch of the unit (September 2015). It also makes use of the existence of the target group of 393 wealthy and a group of another 1,731 potential wealthy who have been identified but never included in the unit's operations owing to limited resources. We match the groups using a propensity score algorithm.FindingsT...
Strategic Investment Tax Incentives in Africa: The Case of Tax Holidays in Uganda
Tax incentives to attract foreign direct investment are common around the world, especially in Af... more Tax incentives to attract foreign direct investment are common around the world, especially in Africa. Even though many commentators remain sceptical regarding their effectiveness, tax incentives remain popular policy tools for governments in low-income countries seeking to attract investors. Like many other countries in Africa, Uganda has attempted to use tax incentives to attract investors for decades. For many years these incentives took the form of statutory discretionary tax holidays issued by the Executive branch of government. These discretionary tax holidays were abolished in 1997 with the amendment of the Investment Code Act and the introduction of the Income Tax Act. However, over the years, non-statutory tax holidays issued by the Executive re-emerged taking the form of private agreements between the government and specific investors. In 2018 Parliament introduced an extensive non-discretionary statutory tax incentives regime which included a ten-year tax holiday for inve...
The rate of occurrence of tax evasion is higher in Uganda than in the rest of East Africa. Where ... more The rate of occurrence of tax evasion is higher in Uganda than in the rest of East Africa. Where the taxpayer has latitude to decide whether or not to be compliant, as in the case of income taxes, Ugandans seem to be less compliant than other East Africans. Uganda collects less in domestic taxes than other countries in the region. For revenue, the Ugandan government depends more on customs duties, on taxes that are difficult to dodge, notably Withholding Tax, and on taxes where there are in-built incentives to comply, such as Value Added Tax (VAT). The framework for improving tax compliance consists of three broad channels: making it easier for taxpayers to comply (facilitation), enforcement and increasing trust (in the government, in its spending practices, and in the tax collection agency itself). Using this framework, we discuss the measures that have been adopted by the Uganda Revenue Authority (URA) and the Government of Uganda, the successes achieved and the gaps that remain. The URA is best placed for facilitation. It also plays a major role in enforcement, although its efforts may be either supported or undermined by the government and politicians. The URA can do little to increase trust in the government in general; that is principally a job for the government. The URA can mainly make itself more trustworthy in the eyes of taxpayers by being transparent and minimising corruption. We find that URA has been successful in facilitating tax compliance, although there are opportunities for improvements on its current initiatives. The URA's enforcement actions are, however, weak and limited. To a large extent, they have been undermined by the government and politicians. Enforcement has also been weak, due to internal URA factors, such as the understaffing of the enforcement team and the fact that the URA does not take enforcement action as often on small taxpayers. Lastly, very little has been done to build taxpayer morale. There are widespread concerns over the poor use of tax money, missing or poor government services and some sections of society being shielded from paying their share, because of their connections or roles in government. The URA is also not highly trusted and corruption is still a major problem among tax collectors. To build trust in the government, the URA is undertaking some of the tasks of justifying tax collection that would normally be undertaken by another part of government. There is a lot of scope for both the government and URA to gain more trust from the taxpayer. Improving tax compliance in Uganda will require the government (in the sense of the executive) and the URA to work more together. The government should give more support to URA activities, desist from protecting non-compliant taxpayers and be accountable to the public for the revenues collected. The URA needs to improve its trust-building initiatives and address some internal weaknesses.
What Can We Learn from the Uganda Revenue Authority’s Approach to Taxing High Net Worth Individuals?
Research Papers in Economics, 2018
Country report Uganda Acknowledgements Please cite as About the project SOUTHMOD -simulating tax and benefit policies for development
Country report Uganda Acknowledgements Please cite as About the project SOUTHMOD -simulating tax and benefit policies for development
Small Nets for Big Fish? Tax Enforcement on the Richest – Evidence from Uganda
ppropriately taxing the richest is a priority for every government, even more so in Africa, where... more ppropriately taxing the richest is a priority for every government, even more so in Africa, where higher revenue mobilisation is needed to fund growth. In Uganda, the revenue authority launched a specific unit to monitor the tax affairs of the richest individuals. Thanks to a close collaboration with the Uganda Revenue Authority (URA), we evaluate the impact of such policy on a range of tax filing and payment outcomes of targeted taxpayers, as gathered from a wealth of administrative data. We show that the policy only has been partially successful. While it increased the probability of filing, especially by politically relevant taxpayers, it produced a seemingly small response in which treated taxpayers would declare less on different margins, with the end result of not declaring more tax liabilities. On the tax payment side, only a small yet significant impact on tax collected is measured. In parallel, we show a strong compensating response across tax heads. Importantly, we also me...
This study has been prepared within the UNU-WIDER project Building up efficient and fair tax syst... more This study has been prepared within the UNU-WIDER project Building up efficient and fair tax systems -lessons based on administrative tax data, which is part of the Domestic Revenue Mobilization programme. The programme is financed through specific contributions by the Norwegian Agency for Development Cooperation (Norad).
Taxing Agricultural Income in the Global South: Revisiting Uganda’s National Debate
The issue of agricultural taxation has almost completely disappeared from the scholarly and polic... more The issue of agricultural taxation has almost completely disappeared from the scholarly and policy agendas in recent decades. And yet, agriculture is taxed very lightly despite contributing substantially to GDP across many Global South countries today. In some cases, light-touch taxation may be necessary to encourage investment in the sector and to protect small and subsistence farmers. However, anecdotal evidence from countries like Uganda suggests that there are a substantial number of high-income earners engaged in agricultural activities that are sheltered almost completely from any form of taxation. More effectively taxing these high-income earners could provide much-needed resources to finance public service provision in lower-income countries. The time is ripe, this paper argues, to revitalise discussions about how best to tax the agriculture sector.
Analysis of public sector tax compliance in Ethiopia 4 Primary risk factors contributing to publi... more Analysis of public sector tax compliance in Ethiopia 4 Primary risk factors contributing to public sector tax compliance behaviour 4.1 Administrative structures 4.1.1 Perceptions about enforcing tax laws on the public sector 4.1.2 A fragmented VAT withholding system 4.1.3 Malfunctioning e-filing and e-payment systems 4.1.4 Limited taxpayer sensitisation campaigns 4.1.5 Low levels of automation and lack of interface with other government systems 4.1.6 Unsatisfactory services rendered 4.2 Legislative frameworks
Low-income countries have, on average, reduced their reliance on foreign aid inthe past two decad... more Low-income countries have, on average, reduced their reliance on foreign aid inthe past two decades. This has been achieved in part by collaborating with high-income countries and donor agencies to strengthen the capacity of tax authorities to collect revenue. While significant progress has been made, various revenue sources remain untapped. Many low-income countries continue to rely heavily on indirect taxes, such as Value Added Tax, and customs and excise duties. Income taxes contribute a very small percentage to total tax revenue, and are paid mainly by people in formal employment and large companies. It is estimated that on average, personal income taxes (PIT) contribute only 2 per cent of GDP in sub-Saharan Africa, which is low when compared to the 10 per cent collected in high-income countries.
What type of Exports contribute to Uganda’s Economic Growth?
A Research report Submitted In Partial Fulfillment of The Award of The Masters of Arts Degree in ... more A Research report Submitted In Partial Fulfillment of The Award of The Masters of Arts Degree in Economic Policy And Planning
Virtually all the literature on taxation presents it as a relationship between government and non... more Virtually all the literature on taxation presents it as a relationship between government and non-government taxpayers. And even though in practice government organisations are – or should be – big taxpayers, very few revenue authorities treat these organisations as a separate segment of taxpayers. Different categories of taxpayers behave differently and so need to be treated differently to best encourage their compliance. With this in mind, in 2014, the Uganda Revenue Authority (URA) established the Public Sector Office (PSO) as a separate office to manage the affairs of government ministries, departments and agencies. Subsequently, the duties of the office were expanded to include the management of the affairs of politically influential individuals. Within the first year of its operation, the PSO had increased revenue collections from government organisations by 194 per cent when compared to the previous year. The PSO is now the second largest contributor to domestic tax colle...
Many developing countries have established a presumptive tax regime for small and medium-sized en... more Many developing countries have established a presumptive tax regime for small and medium-sized enterprises to improve tax compliance and simplify the tax regime. This study analyzes tax and administrative reforms which have been targeted to small businesses in Uganda using the populationwide tax administrative data. First, we utilize two different presumptive tax reforms to evaluate their impact on business activity of small enterprises. Second, we exploit two administrative interventions, the taxpayer’s registration campaign and the new electronic filing system for tax returns, to estimate their effects on number of taxpayers, and entry and exit of businesses using the difference-in-differences approach. We provide the first estimates of elasticity of taxable income for small businesses in low-income country context. Moreover, our analysis is the first study to detect the impact of tax administrative changes in the electronic filing system and taxpayer’s registration campaign.
This study evaluates the impacts of two recent policy interventions, the ‘Taxpayer Register Expan... more This study evaluates the impacts of two recent policy interventions, the ‘Taxpayer Register Expansion’ project (TREP) and a simple internet based filing of presumptive tax (e-filing), on the number of small firm taxpayers in Uganda. Using administrative data from the Uganda Revenue Authority (URA) information system covering both presumptive taxpayers and comparable small corporate income tax (CIT) payers, the paper compares the number of firms in different geographical areas and firm types to uncover the impact of these new compliance interventions, whose introduction varied across region and time. The results show that both TREP and e-filing had a large positive impact on the number of presumptive tax payers.
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Papers by ronald waiswa