Tax administration and domestic revenue mobilization in Uganda: A case of Uganda Revenue Authority

Abstract

The study sought to analyze the tax administrative reforms and domestic revenue mobilization in Uganda a case of Uganda Revenue Authority. One of the key objectives of tax reforms in Uganda was to ensure that the tax reforms could be harnessed to mitigate the perpetual fiscal imbalances. This would be achieved through effective tax policies intended to make the yield of individual taxes responsive to changes in the national income. In addition, it was expected that the predominant taxes in the revenue would be those with highly elastic yields with respect to national income (or proxy bases). This study applies the concepts of elasticity and buoyancy to determine whether tax reforms in Uganda achieved the objectives. The study used a cross sectional survey both quantitative and qualitative data gathered in respect to establishing the relationship between the variables under the study and a descriptive research design was employed and random sampling was used to determine the sample size. A sample of 60 was considered that comprised of staff from all the departments of Uganda Revenue Authority. Primary data was collected by the use of questionnaires which focused on the research questions; Secondary data was got from the records at the various branches. Data was presented in form of Frequency tables which showed the strength of the relationship between tax administration and domestic revenue mobilization. Findings on tax administration indicated that more emphasis was put on indirect tax reform and that led to improvement in its revenue collection however, direct taxes were given very minimal attention. Domestic Revenue Mobilization also improved greatly because domestic revenue mobilization procedures became more effective in collecting tax revenue from both organizations and individual tax payers. Evidence suggests that effective tax reforms had a strong positive impact on the overall tax structure and on the individual tax handles. In fact the elasticity of indirect taxes was high and that of direct taxes was low, especially after reforms. Despite this positive impact, the reforms failed to make VAT Responsive to changes in income, although VAT was predominant in the structure. Recommendation on tax administration were that, Uganda Revenue Authority improves on the tax reforms to become user friendly, lowers pay as you earn threshold in order to capture income of majority citizens and furthermore to revise the list of zero rated supplies, diplomatic privileges act and the list of institutions whose incomes are tax exempted.