URA registers UGX 210b PAYE surplus

Uganda Revenue Authority (URA) has registered a sh210.02bn surplus on Pay as You Earn (PAYE) for the period July 2020 to April 2021 as a result of the recruitment and promotion of employees in the public sector.

Information from revenue performance by the tax head for the period July 2020 to April 2021 indicates that in addition, URA registered an increase in PAYE collections by sh61.91 billion as a result of payment of bonuses and higher salaries in the private sector and a sh316.34b increase in the public sector.

The information contained in the Ministry of Finance report on the budget further shows that during the same period, URA also registered a surplus of sh17.83bn from gaming tax.

However, URA registered deficits under corporate income tax (sh214.44bn), withholding tax (sh126.74bn) and rental income tax (sh122.1bn).

URA attributed the deficit on corporate income tax to declines in the profitability of firms, as a result of the negative impacts of lockdown measures instituted to curb the spread of coronavirus.

The deficit in rental income tax, URA said it was partly on account of delayed implementation of the rental income tax collection solution.

“This delay alone accounts for sh85 billion of the above shortfall. In addition, there have been some losses on account of ambiguity in the rental income tax legislation, which complicates tax administration,” URA said.

“There was also a shift in the behaviour of individuals as some businesses permanently operated remotely while some traders shifted their business to online trading. This resulted in declines in occupancy and hence, decline in rental income tax,” URA added.

The deficit in withholding tax was attributed to a decline in government payments arising from operating remotely and general budget cuts, management and professional fees and general supplies.

“There was also a decline of sh96.33bn on withholding tax on dividends, which is another indicator of declines in profitability of firms,” the Authority said