URA moves to eliminate penalties, fines for non-tax compliance

The Uganda Revenue Authority (URA) has introduced Real-time Audit, a new system that will assess taxpayers’ transactions in real-time, and send prompt alerts where irregularities are detected.

The new system is intended to improve taxpayer compliance and avoid adverse penalties in the form of fines and penalties.

This is contained in the URA domestic taxes compliance improvement plan (CIP) for the financial year 2024/25.

Under the plan, taxpayers will receive regular notifications called “Real-time Tax Advisories” (RTA), based on what URA will have discovered in its review.

The RTAs will highlight potential tax implications and offer relevant guidance on how to resolve them. 

According to URA, this will help taxpayers minimise their tax liability and ensure timely compliance with tax obligations, meaning that it is advantageous to both parties. 

“The Advisories are aimed at helping the taxpayers in reducing their exposure to additional taxes, interest, and penalties, by encouraging timely and accurate declarations and tax payment,” a statement by URA reads in part. The system seeks to facilitate taxpayers to access URA services like the Tax Clearance Certificate, the Authorised Economic Operator status, and tax exemptions, among others.

The system was informed by the fact that improper behaviour by taxpayers adversely affects revenue mobilisation. Some behaviours that obstacles to revenue mobilisation have been identified by the CIP, and the related risks include suspicious and unexplainable loans in their balance sheet, when a trader is eligible for VAT registration but is not registered, and inaccurate registration details.

Others include Local Governments not declaring all employees in their Pay As You Earn returns, variances between sales declarations and VAT declarations, a trader who has not declared VAT on imported goods, overstated trade payables, businesses in gross loss positions and partners not registered for income tax.

In total, there are 20 areas of focus considered risks. URA urges taxpayers to review their internal controls in the said areas as they transact during the year to ensure the accuracy and completeness of their declarations. URA seeks to meet the Shs32 trillion target that was set by the government for the tax body this financial year, up from the 29.6 trillion target for last year.