Overview:
Tax revenue collection was less of the Shs2.033.92 trillion target by Shs252.38 billion. All the three major tax categories registered shortfalls during the month.
Government of Uganda collected revenue totalling Shs1.887 trillion in March 2023, which was 13.9 percent lower than the target of Shs2.192.01 trillion, a new report by the Finance Ministry shows.
According to the Performance of the Economy Report for March 2023, both tax and non-tax revenue were lower than their respective targets.
Of the total amount collected, Shs1.781.54 trillion was tax revenue while Shs106.37 billion was non-tax revenue.
Tax revenue collection was less of the Shs2.033.92 trillion target by Shs252.38 billion. All the three major tax categories registered shortfalls during the month. “Direct taxes registered a shortfall for the first time this financial year amounting to Shs67.85 billion,” the report states.
This followed an underperformance of corporate tax (short by Shs60.27 billion) and withholding tax (short by Shs22.94 billion) both of which more than offset the surpluses registered for PAYE (Shs29.32 billion) and rental income tax (Shs1.73 billion), the report adds.
Similarly, indirect taxes were also short of the target for the month by Shs45.30 billion as both excise duty and Value Added Taxes were lower than targeted by Shs4.12 billion and Shs41.18 billion, respectively.
“The major reason for the underperformance of both direct and indirect domestic taxes was the level of economic activity, which albeit improving, was lower than what had been projected for this period at the time of setting the targets. As a result, the projected profitability for firms as well as projected demand for goods and services turned out lower than expected, which negatively affected performance of corporate tax, VAT and excise duty,”
Performance of the Economy Report for March 2023,
“The major reason for the underperformance of both direct and indirect domestic taxes was the level of economic activity, which albeit improving, was lower than what had been projected for this period at the time of setting the targets. As a result, the projected profitability for firms as well as projected demand for goods and services turned out lower than expected, which negatively affected performance of corporate tax, VAT and excise duty,” the report states.
However, the largest shortfall in tax revenue was registered under taxes on international trade transactions. The amount collected under this category was Shs733.60 billion against a target of Shs867.80 billion, posting a shortfall of Shs134.20 billion.
“This followed lower than projected volumes of imports such as petroleum and others. As such, petroleum duty, import duty, excise duty on imports and VAT on imports all underperformed during March 2023,” the report states.
Expenditure Total government spending in March 2023 amounted to Shs 2,847.08 billion which was higher than the plan of Shs 2,707.46 billion for the month. The higher spending was mainly registered under the recurrent category which was above its plan for the month by 23.5 percent (Shs 394.30 billion).
Expenditure on non-wage recurrent items explained this performance as most MDAs exhausted their funds for Quarter three while completing their quarterly work plans for this period, the report states.
Development expenditure, however, performed below the plan for the month mainly due to externally financed development projects which were less than the plan by 33.8 percent.
“Performance of this category is hinged on the disbursement of funds by development partners and does not reflect the physical progress of the projects,” the report states. The domestically financed development projects performed at 99.3 percent of the plan for the month.