FAMReports News Desk
The Uganda Revenue Authority (URA) is ramping up efforts to bring small and informal businesses into the formal tax administration framework, a critical step in its strategy to strengthen domestic resource mobilization and reduce dependency on foreign aid.
At the heart of this push is the Electronic Fiscal Receipting and Invoicing System (EFRIS), a digital compliance tool that captures real-time data on business transactions, thereby enhancing transparency and minimizing revenue leaks. URA says this digital-first approach will help widen the tax net and increase compliance among Uganda’s growing small and medium enterprises (SMEs) sector.
Speaking in his weekly media column, URA Commissioner General John Musinguzi reaffirmed the agency’s commitment to ensuring that even small and previously informal businesses become compliant with tax laws.
“Integration enables URA to collect accurate, real-time data on business transactions, thereby widening the tax net and improving compliance,” Musinguzi emphasized.
With the adoption of EFRIS, businesses are required to generate digital receipts and invoices that are automatically transmitted to URA’s monitoring systems. This mechanism seals long-standing loopholes that previously allowed underreporting and non-disclosure of business revenues.
Technology as a Backbone of Compliance
Since 2021, URA has partnered with Global Voices Group (GVG), a leading international technology provider, to deploy advanced compliance tools that independently verify taxpayer declarations. This technological shift reduces reliance on traditional self-reporting—a process that had become prone to abuse by tax evaders.
Through GVG’s systems, URA now has improved visibility over business transactions, giving the tax body enhanced capacity to detect, audit, and respond to inconsistencies in taxpayer reports. These developments mark a significant evolution in Uganda’s approach to domestic revenue collection.
Musinguzi outlined that new businesses—ranging from cleaning services and trades to other professional services—are now required to obtain Taxpayer Identification Numbers (TINs), register for Value Added Tax (VAT) if their annual turnover meets or exceeds the legal threshold, and file Pay As You Earn (PAYE) returns for their employees on a monthly basis.
SMEs as Key Contributors
URA views the integration of SMEs as central to achieving its ambitious domestic revenue target of Shs 29 trillion for the 2024/2025 financial year. According to officials, the small business sector is among the fastest-growing in Uganda, yet it has historically remained under-taxed.
“With improved digital compliance, small businesses are now key contributors to our domestic revenue effort,” a senior URA official explained. “Bringing them into the system helps ensure that all sectors of the economy share the tax burden fairly.”
While the new requirements have sparked concern among some SME operators—many of whom cite financial and technical challenges—URA argues that the long-term advantages of formalization outweigh the short-term costs. These benefits include better record-keeping, enhanced access to financing and investment, and improved business reputation.
Support Through Education and Sensitization
To ease the transition, URA has launched a broad taxpayer education campaign aimed at demystifying the new systems and helping small business owners understand their obligations. The campaign includes workshops, media engagements, online tutorials, and direct community outreach.
These taxpayer sensitization initiatives are designed to build confidence among business owners and reduce resistance to the digital systems being rolled out. URA believes that through education and partnership, compliance can be achieved without alienating the small businesses that form the backbone of Uganda’s economy.
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The integration of SMEs into the tax regime is just one pillar in URA’s wider reform agenda. The agency is also prioritizing digital transformation, data-driven decision-making, and transparency in its collection practices as it seeks to mobilize domestic revenues to support Uganda’s national development priorities.
As the 2024/2025 fiscal year unfolds, URA is expected to intensify compliance monitoring, expand taxpayer registration, and deepen its digital infrastructure—moves that underscore its determination to maximize every available revenue stream.
With formalization no longer optional, URA’s message is clear: Uganda’s future economic sustainability depends on broad-based compliance, and small businesses have a significant role to play in that journey.
