What Can We Learn from the Uganda Revenue Authority’s Approach to Taxing High Net Worth Individuals?

Wealthy people contribute a significant share of the total revenue collected through personal income tax (PIT)in high-income countries. This is not the case in most low-income countries, where the bulk of revenue from PIT is collected from people who are in formal employment, especially in the public sector. In most cases, PIT is collected by employers and remitted to the tax authority. The problem is not an absence of laws providing for the taxation of wealthy individuals (commonly referred to as High Net Worth Individuals (HNWIs)). Rather, these laws are rarely implemented. On the one hand,this results in losses of income tax revenue,and,on the other, in severe inequity in the distribution of the tax burden. Successfully levying PIT on HNWIs requires a special organisational effort on the part of the tax authority

How Clean is our Taxpayer Register? Data Management in the Uganda Revenue Authority

Revenue administrations collect large amounts of data on individuals and firms in the course of their work. Increasingly, this data is digitised. The use of digital technologies has the potential to greatly improve the efficiency and effectiveness of tax administration, by: Reducing the cost of routine operations for both taxpayer and tax collector; Reducing the need for face-to-face interactions between taxpayers and tax collectors,thereby shrinking opportunities and incentives for collusion and corruption; Making it possible to select taxpayers for audit easily and cheaply on the basis of riskanalysis; Opening up new opportunities to undertake statistical analysis to assess theeffectiveness of existing operational procedures, and to design improvements. The Uganda Revenue Authority (URA) uses automated digital processes to a higher degree than most tax administrations in Africa. These processes nevertheless suffer from a range of problems. We report here on an assessment that the URA undertook of one important aspect of its own data management practices: the management and accuracy of one of its most important data bases, the taxpayer register. We discovered considerable problems of inaccurate data and, primarily as a result of the activities of tax agents, a high level of duplication of the same telephone numbers and email addresses, and possession of multiple taxpayer identification numbers. These inaccuracies reflect a number of factors, including inadequate design of registration forms and procedures, and the low priority given to verification and the accuracy of the register

Do tax administrative interventions targeted at small businesses improve tax compliance and revenue collection?Evidence from Ugandan administrative tax data

This paper conducts an impact evaluation of the effects of two tax administration interventions—a taxpayer register expansion and education programme, and a new electronic filing system for presumptive tax—on the number of small business taxpayers and presumptive tax revenues in Uganda. Using a difference-in-differences approach and administrative data covering both presumptive taxpayers and comparable small corporate income taxpayers, we find that the number of small business taxpayers filing tax returns and presumptive tax revenues increased substantially after the interventions. We argue that the interventions complement each other because both interventions were established around the same years, and the taxpayer register expansion programme focused on not only registering but also educating taxpayers with regard to tax compliance. We analyse the cost-effectiveness of the taxpayer register expansion programme and find that the benefits outweigh the costs.</p

Taxation des individus ayant un patrimoine net important: Leçons tirees de l’expérience des autorites fiscales de l’Ouganda

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.Les pays à faible revenu ont, en moyenne, réduit leur dépendance vis-à-vis des aides internationales au cours de ces deux dernières décennies. Ceci a été réalisé en partie grâce à la collaboration avec des pays à hauts revenus et des organismes donateurs dans le but de renforcer la capacité de collecte des autorités fiscales. Même si l’on note des progrès significatifs, diverses sources de revenu restent inexploitées. Beaucoup de pays à faible revenu continuent de dépendre lourdement des impôts indirects, tels que la Taxe sur la Valeur Ajoutée, et les droits de douane et d’accise. Les impôts sur le revenu ne représentent qu’un très petit pourcentage des recettes fiscales totales et sont payés principalement par les gens ayant un emploi formel et les grandes entreprises. On estime que les impôts sur le revenu des personnes privées (IRPP) participent en moyenne à seulement environ 2 pour cent du PIB dans l’Afrique Subsaharienne, ce qui est bas comparé aux 10 pour cent collectés dans les pays à hauts revenus