End Third Quarter Monitoring and Evaluation Report – Uganda

ANNUAL MONITORING AND EVALUATION REPORT FY 2018/19

Uganda Revenue Authority Research, Planning and Development Corporate Performance Reporting, Monitoring and Evaluation P.O. Box 7279 Kampala

i Executive Summary

Assessment of strategy execution is acknowledged as one of the most important aspect of achieving the Corporate Plan objectives. It highlights areas of improvement, leading to corrective action. In that fold, the Financial Year 2018/19 Corporate Monitoring and Evaluation report, provides an objective assessment of progress made, at different levels of the Corporate Plan.

The assessment focused on the corporate measures, key departmental results, budget efficiency, and project implementation. 15 measures were analyzed out of the 17 that indicate progress towards the 6 strategic objectives.

The 2018/19 targets of six objective measures were met. These were proportion of revenue collected, tax administration costs as a percentage of revenue, average turnaround time (for services whose time exceeds 7 days), Proportion of the risk based compliance programmes implemented, system mean time to recover and proportion of stakeholders involved in URA interventions. There was an average achievement (performance between 75% & 99%) for 8 objective measures including compliance level, business process maturity level, client satisfaction level, proportion of agreed partnership expectation implemented, staff productivity levels, staff motivation, staff integrity level and employee stability. Two of the objective measures were not achieved (average turnaround time (average turnaround time for services whose time does not exceeds 7 days and number of unplanned system downtimes) as expounded in the details in the report.

In terms of departmental performance, IAC, TID and LSBA achieved 100% of their 2018/19 targets. They fully executed 100% of their activities within the period. The other departments didn’t fully achieve the output targets within the period however there was a significant improvement among all departments in comparison with the previous years. There is need to continuously monitor and review work plan execution at different levels for better performance. Various recommendations have also been provided in the report, focusing on each department and result area.

URA Performance at a glance

Annual performance of the URA corporate scorecard FY 2018/19

Total number of % Not measures assessed % Achieved % Average Achieved 16 37.5% 50.0% 12.5% Total

Annual departmental scorecards performance FY 2018/19 Total number of Outputs % Achieved % Average % Not achieved % No data measures CGO 62.50% 37.50% 0% 0% 8 CSD 33.33% 66.67% 0% 0% 6

TID 100% 0% 0% 0% 6

LS&BA 100% 0% 0% 0% 11

100% 0% 0% 0% 10 IAC 13.33% 60.00% 26.00% 0% 17 DT 17.39% 0% CD 65.22% 17.39% 22

Annual Budget performance FY 2018/19

Budget Target (Bn UGX) Spent % Budget spent (Bn UGX)

URA overall 350.22 350.22 100

CGO 13.29 13.29 100 DT 99.57 9.57 100 TID 6.71 6.71 100 LS&BA 6.57 6.57 100 IAC 5.69 5.69 100 CSD 108.79 108.79 100 CD 74.02 74.02 100 Capital purchases 35.57 35.57 100

Source: Activity Based Budget, Finance Division

Source: Activity Based Budgeting Report Finance Division

iii

Table of Contents

Executive Summary ...... ii URA Performance at a glance ...... iii Table of Contents ...... iv List of Tables ...... v Acronyms ...... vi 1.0 Introduction ...... 1 1.1. Objectives and focus of the Annual M&E report FY 2018/19 ...... 1 1.2. Scope ...... 1 1.3 Methodology ...... 2 2.0 Corporate Performance Outlook/ Strategic Results FY 2018/19 ...... 4 2.1 Assessment of the Financial Perspective ...... 4 2.1.1 Revenue Collection to target ...... 4 2.1.2 Revenue performance trend: ...... 6 2.2 Tax administration costs as percentage of revenue ...... 6 2.3 Improve Compliance ...... 9 2.3.1 Position of national importance ...... 9 2.3.2 Compliance level ...... 9 2.3.3 Other key aspects of compliance ...... 10 2.3.4 Proportion of the risk based compliance programme implemented ...... 13 2.4 Assessment of the Client Perspective ...... 14 2.4.1 Improve quality of service ...... 14 2.4.2 Client Satisfaction ...... 14 2.4.3 Average turnaround time ...... 14 2.5 Optimize Stakeholder relations...... 16 2.5.1 Stakeholders involved in URA interventions ...... 16 2.5.2 Stakeholder relations at station level ...... 17 2.6 Assessment of Business Process Perspective ...... 19 2.6.1 Transform processes ...... 19 2.6.2 Business Process Maturity Level: ...... 19 2.6.3 Number of unplanned system downtimes ...... 20 2.6.4 System meantime to recover ...... 20 2.7 Assessment of Learning and Innovation ...... 21 2.7.1 Improve our people ...... 21 2.7.2 Staff productivity level ...... 21 2.7.3 Employee stability level ...... 21 3.0 Progress of the Projects ...... 23 4.0 Progress on the implementation of Tax administrative Measures for 2018/19 ...... 25 5.0 DEPARTMENTAL PERFORMANCE FY 2018/2019...... 27 5.1 Legal Services and Board Affairs departmental performance assessment ...... 27 5.2 Office of the Commissioner General’s performance assessment ...... 29 5.3 Tax Investigations performance assessment ...... 32 5.4 Customs Department performance assessment ...... 34 5.5 Internal Audit and compliance department performance assessment ...... 36 5.6 Corporate Services department performance assessment ...... 37 5.7 Domestic Tax department performance assessment ...... 40 Annexes ...... 44

List of Figures Figure 1: Comparison of Net Revenue Collections for FY 2014/15 to 2018/19 ...... 6

List of Tables Table 1: URA performance Rating System ...... 2 Table 2: Performance of corporate objectives FY 2018/19 ...... 3 Table 3: Revenue performance by tax category in FY 2018/19 (UGX Bn/%) ...... 4 Table 4: Cost of tax administration in the FY 2018/19 ...... 7 Table 5: Compliance level in FY 2018/19 ...... 10 Table 6: Tax payer register for the period FY 2016/17 – FY 2018/19 ...... 10 Table 7: Filing analysis in FY 2018/19 ...... 11 Table 8: Status of implementation of the risk based compliance initiatives ...... 13 Table 9: Performance on average turnaround time (less than 7 days) ...... 15 Table 10: Performance on average turnaround time (more than 7 days) ...... 16 Table 11: Strategic partnerships engaged at station level ...... 17 Table 12: Summary of the Business process maturity assessment findings ...... 19 Table 13: Status on the unplanned system downtimes in FY 2018/19 ...... 20 Table 14: Employee stability from 2015 to 2018 ...... 21 Table 15: Progress on URA projects implemented in FY 2018/19 ...... 23 Table 16: Tax administrative measures in FY 2018/19...... 25 Table 17: Table: Legal Services and Board Affairs departmental performance ...... 27 Table 18: Office of the Commissioner General’s performance ...... 29 Table 19: Tax Investigations departmental performance ...... 32 Table 20: Customs departmental performance ...... 34 Table 21: Internal Audit and Compliance departmental performance ...... 36 Table 22: Corporate Services departmental performance ...... 37 Table 23: Domestic Taxes departmental performance ...... 40

Acronyms

ASYCUDA: Automated System for Customs Data Bns: Billions CGO: Commissioner General’s Office CPRM&E: Corporate Performance Reporting, Monitoring and Evaluation CSD: Corporate Services Department DFID: Department for International Development DTD: Domestic Taxes Department EAC: East African Community EARATC East African Revenue Authorities Technical Committee FY: Financial Year GDP: Gross Domestic Product IAC: Internal Audit and Compliance IMF: International Monetary Fund KCCA: Kampala Capital City Authority LED: Local Excise Duty LSBA: Legal Services and Board Affairs M&E Monitoring and Evaluation MEC: Management Executive Committee MoFPED: Ministry of Finance Planning and Economic Development MOU: Memorandum of Understanding NSSF: National Social Security Fund NTC: National Targeting Center NTR: Non-Tax Revenue PAYE: Pay as You Earn PDU: Procurement and Disposal Unit RPD: Research Planning & Development TADAT: Tax Administration Diagnostic Assessment Tool TID: Tax Investigations Department TIN: Tax Identification Number TREP: Taxpayer Registration Expansion Programme UGX: Uganda Shillings UNBS Uganda National Bureau of Standards URA: Uganda Revenue Authority VAT: Value Added Tax

1.0 Introduction

Financial Year 2018/19 is the third year of implementation of the URA four year corporate plan 2016/17 to 2019/20. This is the second last year geared towards building a taxpaying culture as the strategic direction for Uganda Revenue Authority. The implementation of the Corporate Plan greatly goes along with continuous implementation of key recommended areas in the prior evaluations that include the annual Monitoring and Evaluation (M&E) report as well as the Mid- term evaluation report. Therefore, the annual M&E report FY 2018/19 provides an outlook of URA’s corporate performance and progress against set targets in the financial year. The report highlights the achievements and progress towards the 6 corporate objectives and pillars of improving the quality of people, improving process efficiency and building productive partnerships.

1.1. Objectives and focus of the Annual M&E report FY 2018/19

The objective of the annual monitoring and evaluation report is to provide timely and accurate information to URA management, on the performance of the organisation in the FY 2018/19. The report provides an analysis of the progress towards the outcomes, outputs that are being realized in terms of actual changes in the quality and utilization of resources. The assessment highlights performance of the organisation and areas of improvement by focusing on three aspects:

(a) Progress made against planned outputs and the use of resources

(b) Explanation for the performance levels achieved

1.2. Scope

Assessment of progress against the Corporate Objectives; (i). Comprehensive assessment of all output indicators with a focus on trends, value addition, causal-effect relationship of objectives and areas that need to be addressed. Identify what has worked, hasn’t worked and reasons for the performance.

(ii) Performance of departments on key result areas Analysis of the performance of departments on key result areas that influence the organisation was made. This reflects the level of achievement but also what needs to be done to improve performance. The linkages with the corporate objectives was made and with emphasis on value addition.

(iii) Budget efficiency Linkages between the budgetary expenditure and the results have been made.

1.3 Methodology a. Analysis and review of reports from the departments on performance at all levels was done. Detailed analysis of departmental scorecards was done to assess the level of achievement towards the set targets. Key emerging issues and recommendations under each department were highlighted for management attention and action. b. Surveys and field validation exercise across URA stations, in which data was obtained to beef up the analysis of the different objectives.

The rating scale for the performance is presented in table 1 below.

Table 1: URA performance Rating System Achieved Where the specific target or action committed to has been achieved by the end of the stated period of evaluation Average Where the specific target or action committed to has not been achieved by the end of the stated period of evaluation but performance is above 75% Not Achieved Where the specific target or action committed to has not been achieved and performance is below 75% No data /Not Where no data has been provided, either because the indicator is not measured Assessed or the responsibility center has not submitted the data or there are no baselines and target for assessment Off Track Where accomplished outputs do not link to the planned outputs

Table 2: Performance of corporate objectives FY 2018/19 Perspective Objective Measure Actual Target Actual Performance Rating 2017/18 2018/19 2018/19 2018/19% FINANCIAL Maximiz Proportion of revenue PERSPECTI e 95.97% 100% 103.94% 100% Achieved collection to target. VE Revenue Tax administration costs as a percentage 100% 2.3% 2.07% 100% Achieved of revenue Improve Position of national Rank 2 - - Complia influence nce 68.5% Average Compliance level 77% 62.09% 80.64% Proportion of the risk 90% based compliance 95.00% 100% Achieved 95% programmes implemented CLIENT Improve 77.4% 84% 77.4% 92.15% Client Satisfaction level Average PERSPECTI quality VE of Average turnaround Not service time (Time doesn’t 3.9 days 2 days 5.3 days 37.74% achieved exceed 7 days Average turnaround time (Time exceeds 7 28 days 30 days 27.52% 100% Achieved days Optimize Proportion of agreed Stakehol partnership 98% 100% 95% Achieved der expectations relations implemented Proportion of stakeholders involved 85% 67.50% 68.00% 100% Achieved in URA interventions BUSINESS Transfor Business Process Average PROCESS m URA Maturity Level Level 1.6 Level 3 2.97 99.00% PERSPECTI Process VE es Number of unplanned 13 9 32 28.13% Not system downtimes Achieved

System meantime to 34.5 hours 2 hours 1.56 100% Achieved recover1 hours LEARNING & Improve Staff productivity level INNOVATION our 90.53% 97% 90.53% 97.30% Average people 84% 74.50% 88.69% Average Staff motivation level 60.7% Staff integrity level 79% 56.30% 71.27 Average

98.4% 98.4% Average Employee stability 94% 100%

1 Includes Domain server (Target of 1 hour), eTAX, ASYCUDA, ECTS, email (Target of 1 hour), Sun system (Target of 4 hours) and CURES, TEVIES, Scanning software (Target of 8 hours) 3

2.0 Corporate Performance Outlook/ Strategic Results FY 2018/19 2.1 Assessment of the Financial Perspective

Objective: Maximize revenue Measure: Revenue collection to target. Annual target: 100%. Actual: 102.02% Measure: Tax administration costs as percentage of revenue Annual target: 2.3% Actual: 2.07% Performance: 100%

2.1.1 Revenue Collection to target

The URA’s gross revenue collection in the period July to June of FY2018/19 was UGX 16,958.10 billion, with a performance of 102.02% and registering a surplus of UGX 335.24 billion. Compared to the same period in the FY 2017/18, there was a growth in revenue of 15.68%. Domestically, revenue of UGX 10,074.12 billion was collected during the FY 2018/19, against a target of UGX 9,747.79 billion. This culminated into a surplus of UGX 326.33 billion, with a performance of 103.35 and a growth of UGX 1,625.20 billion (19.24%) compared to the same period in FY 2017/18. In contrast, International trade collections during the FY 2018/19 were UGX 6,883.98 billion, posting a surplus of UGX 8.91 billion and a performance of 100.13%. In comparison to FY 2017/18, there was a growth in revenue from international trade of UGX 673.15 billion (10.84%) during the FY 2018/19. Detailed revenue performance by tax category is shown in table 3 below. Table 3: Revenue performance by tax category in FY 2018/19 (UGX Bn/%) Tax Head Category FY 2018/19 Net Revenue Actual (UGX Bn) 16,617.65 Target (UGX Bn) 16,358.76 Performance 101.58% Growth 14.95% Gross Revenue Actual (UGX Bn) 16,958.10 Target (UGX Bn) 16,622.86 Performance 102.02% Growth 15.68% Domestic Taxes Actual (UGX Bn) 10,074.12 Target (UGX Bn) 9,747.79 Performance 103.35% Growth 19.24% Customs Taxes Actual (UGX Bn) 6,883.98 Target (UGX Bn) 6,875.07 Performance 100.13% Growth 10.84% Comparative 2017/18 Net collections (UGX Bn) 14,456.11 Growth (%) 13.65% Tax Refunds Expected tax refund (UGX (340.46) Bn) Actual tax refund (UGX Bn) (264.10) Variance (UGX Bn) 76.36 Source: Revenue statistics tables 2017/18

a) Domestic Taxes:

In the FY 2018/19, domestic taxes net collections during the FY 2018/19 were UGX 9,749.29 billion, registering a performance of 102.80% and UGX 265.59 billion above the target. A growth rate of 17.68% was realized compared to FY 2017/18.The major tax heads that recorded gross surpluses during the year were majorly direct taxes that include; corporation tax; that registered a surplus of UGX 331.37 billion mainly attributed to the transport, storage and communication sub sector as well as the financial intermediaries and PAYE; that registered a surplus of UGX 148.60 billion mainly attributed to the public sector that performed at 127.96% of target. In contrast, deficits were registered in withholding tax (UGX 62.62 billion), tax on bank interest (UGX 33.82 billion), treasury bills (BOU) (UGX 17.80 billion), presumptive tax (UGX 9.02 billion), casino tax (UGX 6.68 billion) LED (UGX 150.27 billion) caused by Over the Top tax (OTT) (UGX 234.48 billion) and rental tax (UGX 5.21 billion).

The Key drivers for the revenue performance were; . Arrears recovery initiatives which yielded UGX 109.79 billion from PAYE, boosted collections in the period. . This performance was also supported by an increase in wage bill for public servants mainly due to Government Directive for science cadres that boosted Public Sector PAYE collections leading to a surplus of UGX 176.83 billion. . The improvements in the Integrated Financial Management System (IFMS) that resulted into timely payment of salaries. . Bonus payments during the FY 2018/19, especially in the month of July-2018 . The growth in the economy by 6.1% compared to 6.0% registered in FY 2017/18. . There was also increase in demand for private sector credit to 12% from 6.8% in FY 2017/18.This signifies increase in business activities which improved most company’s profitability affecting corporation tax revenue collections positively.

b) International trade taxes During the Financial Year 2018/19, international trade taxes collections were UGX 6,883.98 billion against a target of UGX 6,875.07 billion, a performance rate of 100.13% and a surplus of UGX 8.91 billion. This resulted into a growth of UGX 673.15 (10.84%) in revenue compared to the last financial year.

Significant surpluses were registered in VAT on imports of (UGX 69.25 billion), withholding taxes (UGX 14.66 billion), infrastructure levy (UGX 12.57 billion), import duty (UGX 9.57 billion), and temporary road licenses (UGX 0.10 billion). In contrast, shortfalls were posted in petroleum duty (UGX 63.26 billion), excise duty (UGX 12.53 billion, export levy (UGX 13.52 billion) and surcharge on used import (UGX 7.92 billion).

The international trade taxes performance was attributed to: . Growth in import volumes. Uganda’s dry cargo import volumes in shillings grew by 29.57% and 26.14% in dollars during the FY 2018/19 compared to last financial year FY 2017/18. The growth in USD import volumes led to the increase in goods that attract VAT on imports by 8.17%, goods that attract import duty increased by 1.62%, goods that attracts excise duty by 6.20% and goods that pay envronmemtal levey by 6.20%. . Increase in tax yield from the major items. The major items that registered increase in tax yield during the FY 2018/19 compared to last year include; worn clothing by (UGX 42.26 billion), wheat/meslin by (UGX 23.85 billion), motor vehicle for transportation of goods by (UGX 27.14 billion), other foot wear by (UGX 26.92 billion), hot rolled iron by (UGX 16.75 billion), Motocycles by (UGX 19.57 billion), portland cement by (UGX 11.90 billion) , petroleum oils by (UGX 10.15billion), new pneumatics tyres by (UGX 15.19 billion) and Cigarettes by (UGX 29.26 billion) which significantly contributed to the total collections.

2.1.2 Revenue performance trend:

In the past 5 financial years, net URA collections have grown by 71.04%. In addition, revenue collection surpassed target for two financial years; 2014/2015 and 2018/2019 as shown in figure 1 below. In general. There is tremendous increase in revenue collection for the period under review. Figure 1: Comparison of Net Revenue Collections for FY 2014/15 to 2018/19 18,000.00 25.00% 16,000.00 14,000.00 20.00% 12,000.00 15.00% 10,000.00 8,000.00 10.00% 6,000.00 4,000.00 5.00% 2,000.00 0.00 0.00% FY 2014/15 FY 2015/16 FY 2016/17 FY 2017/18 FY 2018/19

Target Collection Growth

Source: Revenue statistics tables

2.2 Tax administration costs as percentage of revenue

The focus under the objective is to implement Activity Based Costing & Budgeting (ABB) as an initiative to improve resource prioritization in order to optimize the cost of tax administration. This is done by carrying out quarterly budget performance reviews, preparing and aligning departmental work plans to the budget. The progress made towards the objective is indicated

6 by the tax administration costs as a percentage of revenue. The cost of tax administration in the FY 2018/19 was 2.07% against a target of 2.30%. The performance was above 100%, implying the organization is efficient since less cost were incurred to collect more revenue. This is depicted in table 4 below.

Table 4: Cost of tax administration in the FY 2018/19 Actual Target Gross Revenue Collections 16,958.10 billion 16,622.86 billion Budget spent 350.22 billion 350.22 billion Cost of Tax Administration 2.07% 2.30% Source: Activity Based Budget report 2018/19

The continued implementation of initiatives rolled out in the FY 2015/2016 to FY 2018/19 has contributed to optimization of resource. These included;

The construction of URA house launched in February 2019 pulled together all URA Kampala based stations and optimized resources in terms of; reduction in office rent, internet connectivity cost, reduction in transport cost and green house lights.

URA vehicle lease other than direct purchase of vehicles. This has saved the organization large sums of money that would have been used to buy a fleet of new vehicles acquired on a lease contract to support in revenue field activities and enforcement hence reducing on the cost of tax administration.

Implementation of the e-fleet management booking system. This system requires all vehicles and drivers to be in a single pool and the allocation of task and drivers is done electronically. This has reduced on time wastage and the cost of hiring more drivers leading to the optimization of the tax administration resources.

Roll out of Petro fuel cards for URA cars and making use of URA premises for staff and stakeholder engagements rather than use hotels to the extent possible and Monthly budget performance reports

In addition, the following initiatives have been implemented or planned for implementation.

Use of fuel tags that are placed on the wind screen of each URA Vehicle to ensure that fuel cards are not misused by fuelling non-URA vehicles. At fuel stations, fuel card are matched to fuel tags on the vehicles before refilling is done.

Implementation of the Enterprise Resource Planning which is an integrated corporate business support function, including: Human capital management, Planning and budgeting, finance, procurement and project management, estates and records management.

The key guidelines used in managing the allocated budget include the following.  Reference made to the approved work-plans prior to approving any transaction.  Funds availability should be confirmed by the departmental budget office before execution of activities  Provisions for procurements spilling over from the previous financial year must be made as a matter of priority.  Invoices must be verified and approved by user departments before being sent to the Finance Division for payment. Procurement: For high value procurements, URA has started engaging manufactures of products to obtain competitive prices for the goods, services or software. This will limit the price escalations that we have historically faced by having agents or middle men quoting prices independently with little reference to the manufactures price.

2.3 Improve Compliance

Measures: Position of national influence: Annual Target: Rank 5 Actual: Not Assessed. Compliance level: Financial Year 2018/19 Target: 77%, Actual: 64.84% Performance: 84.21% Proportion of the risk based compliance programme implemented: Annual Target: 95%, Actual: 95.0% Performance: 100%

2.3.1 Position of national importance

This measure hasn’t been assessed since there isn’t enough information to enable objective assessment. The criteria for assessment is not well mapped out. Consideration may be made to substitute the measure with another one that can easily be measured, with available data and also reflect improvement in the compliance level.

2.3.2 Compliance level

The measure has two components; tax and customs compliance. Under tax compliance the measure is based on the following; filing ratios for VAT and PAYE, Arrears portfolio (value) as a percentage of tax revenue, and proportion of arrears portfolio that are older than 12 months (value).

In terms of customs compliance, the following elements are considered; Percentage of imports subjected to physical inspection (red lane), Arrears portfolio (value) as a percentage of tax revenue, and proportion of arrears portfolio that are older than 12 months (value).

The compliance level in the FY 2018/19 was 64.84 % against a target of 77.00 %, a performance of 84.21%. This was mainly attributed to average filing ratio for PAYE at 75.87% and VAT at 88.29%. The resulting average filing ratio (82.08%) is closer to the international standard of 90% as highlighted in table 6 below. However, there is need for more vigor with PAYE filing ratios. The Arrears portfolio as a percentage of tax revenue is still high (21.38%) compared to the standard of 10%. The implication is that more potential tax revenue is held up in the arrears, an indication of non-compliance. In addition, 76.89% of the arrears portfolio is older than 12 months. This is more than three time higher than the standard of 25%. In terms of customs, percentage of imports subjected to physical inspection (red lane) is 32.0% against a standard of 20% this is due to increase in real time risk management but the number will reduce with time.

Table 5: Compliance level in FY 2018/19 Parameters Actual Standard2 Performance (Actual against standard Average PAYE Filing ratio 75.87% 90% 84.30% Average VAT Filing ratio 88.29% 90% 98.10% Arrears portfolio as a percentage of tax revenue 21.38% 10% 46.77% proportion of arrears portfolio that is older than 76.89% 25% 32.51% 12 months Percentage of imports subjected to physical 32.00% 20% inspection (red lane) 62.50% Compliance level 64.84% Source: URA databases

2.3.3 Other key aspects of compliance i) Growth in Tax payer Register

During the FY 2018/19, URA intended to get 100,000 taxpayers onto the tax register. Indeed, the performance was above target as 112,409 taxpayers were brought onto the register by end of FY 2018/19 representing a growth of 64.83% in comparison to FY 2016/17 and a performance of 112.41%. The taxpayer register was at 1,487,354 by end of FY 2018/19 up from 1,320,691 as at the beginning of FY 2017/18. Of these new tax payers, 545,594 were individual tax payers and 39,421 tax payers were non individual as analyzed in the table 6 below:

Table 6: Tax payer register for the period FY 2016/17 – FY 2018/19 Tax registration type As at end FY As at end FY As at end FY As at end FY 2015/16 2016/17 2017/18 2018/19 Non individual 72,988 86,441 102,398 112,409

Individual 829,351 943,101 1,218,293 1,374,945

Total 902,339 1,029,542 1,320,691 1,487,354

Source: URA databases

The growth in the tax register during the implementation period was boosted by the following initiatives:  Taxpayer Register Expansion Programme (TREP) which is collaborative implementation framework through which the key government institutions responsible for business registration, that is, URA URSB, KCCA and Ministry of Local Government join efforts to register and collect taxes from businesses (mainly small and informal businesses).

2 The Standard is based on international best practice which is also highlighted in TADAT Manual

 Block Management System (BMS) which involves the region is divided into logical geographical blocks and a team of tax officers assigned to systematically manage tax compliance of each taxpayer within their block on a day-to-day basis.  Government directive that all their employees get Tax Identification Numbers (TINs) before their salaries are paid in IFMS caused a big growth in employee registrations.  Register cleaning initiatives have been carried out mainly through the compliance improvement plan.  Tax education initiatives that have increased public awareness. ii) Filing Filing ratios: In the FY 2018/19, the average filing ratio for VAT was 88.29%, and 75.87% for PAYE. Based on the findings as shown in table 7 below, the filing gap is still significant, thus need to intensify initiatives to increase tax filing.

Table 7: Filing analysis in FY 2018/19 PAYE Filing Ratio (%) Target (%) PAYE filing gap (%) LTO 96.13 98.00 1.87 MTO 89.6 97.00 7.40 STO 62.18 75.00 12.82 PSO 55.57 70.00 14.43 PAYE AVERAGE 75.87 85.00 9.13 VAT Filing Ratio (%) Target (%) VAT filing gap (%) LTO 97.31 98.00 0.69 MTO 94.05 99.00 4.95 STO 84.92 75.00 - PSO 76.86 84.00 7.14 VAT AVERAGE 88.29% 89.00% 3.20% Source: URA Database

. There was higher compliance in VAT filing at 88.29 % during the FY 2018/19 in comparison to PAYE at 75.87 %. Despite the fact that the overall average filing ratio (88.29%) was close to the standard (90.00%) it is expected to be achieved by end FY 2019/20. . Generally, the filing gap in PAYE is higher than that for VAT during the FY 2018/19 and as such Domestic Taxes department should intensify initiatives to promote voluntary tax filing with in the tax paying community alongside punitive amendments in the tax law to cater for late filing.

iii) Arrears The total arrears stock as at end of FY 2018/19 was UGX 3,624.81 billion and the total recoveries made during FY 2018/19 were UGX 695.33 billion.

Domestic tax Arrears: The total DT debt stock as at 30/06/2019 were UGX 3,525.40 billion. A total of UGX 695.33 billion was recovered during the Financial Year 2018/19.

Customs tax Arrears: The total outstanding Customs arrears stock as at the end of Financial year 2018/19 were UGX 99.41 billion of which UGX 48.15 billion were arrears carried forward into the FY 2018/19 and UGX 51.23 billion were generated within the FY 2018/19. The recoveries made during the Financial year amounted to UGX 102.82 billion.

iv) Domestic Audits During the Financial Year 2018/19, a total of 14,699 out 17,295 compliance actions were conducted posting a performance of 84.99%. The compliance initiatives were assessed at UGX 953 billion and yielded UGX 29.71 billion. The compliance actions implemented included; 7,946 compliance advisories, 3,766 returns examinations, 2,752 compliance visits, 51 spot inventory and 42 self-health reviews.

Customs Audits: A total of 282 (181 comprehensive, 101 issue) audits were completed against a target of 324 audit cases, a performance of 87.04% during the Financial Year 2018/19. These resulted into assessments of UGX 134.80 billion of which UGX 74.44 billion was agreed.

2.3.4 Proportion of the risk based compliance programme implemented The assessment of the measure is based on the initiatives/strategies developed to improve compliance through risk based compliance programmes. Table 8: Status of implementation of the risk based compliance initiatives

Planned Initiatives Executed initiatives July to March FY 2018/19 2018/19 1 Strengthen Investigations 88 out of 75 planned investigations cases were & Intelligence concluded by end of third quarter and this resulted into a revenue yield of UGX 62.51 billion.

16 out of 16 planned intelligence briefs were developed these included; (missing trader (VAT fraud) impact analysis, withholding tax on agricultural supplies, loss making schemes in the sugar manufacturing industry, mobile phone dealership services models, sugar smuggling and related schemes, evasion schemes of sugar industry distributors, PAYE non-compliance, compliance risks associated with income tax declarations, cross-border cash movement, tax evasion risks in the importation of software, outcomes of the intervention against input VAT arising from fictitious imports, falsified remittances by a group of companies, non-compliance affecting income tax with emphasis on Corporation tax, vulnerabilities and threats to stamp duty collection: a case study of land, compliance assessment of importation, temporary importation and boarded off motor vehicles, potential compliance risks paused by alternative payment methods). These provide details on untaxed revenue and highlight revenue leakages. 2 Conduct Post Clearance A total of 282 (181 comprehensive, 101 issue) audits were audits completed against a target of 324 audit cases, a performance of 87.04 percent during the FY 2018/19. 3 Strengthen Enforcement & Enforcement interventions resulted to 9,152 seizure Surveillance notices of which 8,000 were for dutiable goods and 1,152 were for non-dutiable goods. This led to a recovery of led to a recovery of UGX 78.48 billion. Source: M&E Report 3rd Qtr. 2018/19

Observation: There is a risk engine that use URA live data from E-hub that can be adjusted based on the business intelligence finds to aid compliance interventions. Recommendation: There is need to use the risk engine result as a reference for all compliance intervention for effective, sustainable and efficient service delivery

2.4 Assessment of the Client Perspective

2.4.1 Improve quality of service Client Satisfaction level Annual Target: 82% Actual: 77.4% Performance 94.4% Average turnaround time (Time doesn’t exceed 7 days) Target: 2 days Actual: 3.9 days Performance: 51.2% Average turnaround time (Time exceeds 7 days) Target: 30 days. Actual: 28 days Performance: 100%

2.4.2 Client Satisfaction A client satisfaction survey was carried out at the end of FY2017/18, which included a sample of 306 taxpayers drawn from all regions of the country. The following were the key findings. a. The level of client satisfaction was established at 77.4% against a target of 82%, a performance of 94.4% b. Assurance (Knowledge and courtesy of employees and their ability to convey trust and confidence) was the mostly rated dimension. Clients highly believe that their information is kept confidential by URA. Additionally, clients have a very high sense of confidence and trust in URA staff in service provision. They highly believe that URA staff are knowledgeable in the services offered to clients. c. Responsiveness which is the willingness to help customers and provide prompt service was the second mostly rated aspect of customer service by taxpayers. The clients point out the willingness of staff to help clients as key in service delivery. d. Of particular concern, is the fact that 62% of the clients believe that URA has not done enough to solve the challenges that taxpayers face in fulfilling their obligation to pay taxes. They cited out challenges like the network issues, complex online forms and limitations in spreading out the tax burden.

2.4.3 Average turnaround time This measure has two components; services whose turnaround time shouldn’t exceed 7 days and those whose turnaround time exceeds 7 days.

a) Average turnaround time (Time doesn’t exceed 7 days) The average turnaround time for domestic services in the FY 2017/18 was 5.8 days against a target of 3.2 days, a performance of 55.3%. Good performance was registered in the motor vehicle validation whose turnaround of 1.9 days is on target. Other services are beyond the expected turnaround time which can be explained by the following a. Individual amendments mainly consist of change of email address which requires physical identification of taxpayers leading to delays. b. Alteration of motor vehicle particulars depends on when taxpayers bring vehicles for inspection thus affecting turnaround time for the key business processes.

14 c. The limited contact Centre technology which leads to dropped calls and long waiting hours by clients. There is thus need to upgrade the technology.

There is need to closely follow up and ensure adherence to service level standards in bid to meeting the expectations of the clients. Recommendations: . There is need to closely follow up and ensure adherence to service level standards in bid to meeting the expectations of the clients. . There is need to establish a comprehensive client end-to-end feedback mechanism to ensure client needs are addressed

On the other hand, the turnaround time for customs procedures was 1.65 days against a target of 1.47 days, a performance of 89.09%. There are some customs procedures whose turnaround time is not yet monitored. These are depicted in table 9 below.

Table 9: Performance on average turnaround time (less than 7 days)3 DT Services Target Actual 1 Processing of a TIN - Individual 2 days 6.50 days 2 Processing of a TIN - Non Individual 3 days 5.50 days 3 TIN amendment - Individual 4 days 18.00 days 4 TIN amendment - Non Individual 4 days 19.75 days 5 Alteration of Motor vehicle particulars 5 days 9.50 days 6 Motor vehicle validation 2 days 3.75 days 7 Change of Motor vehicle ownership 5 days 6.25 days 8 Issuance of a tax clearance certificate 2 days 3.50 days 9 Query resolution 2 days 4.25 days DT Average 3.2 days 3.2 days Customs Services Target Actual 10 Average time goods Clearance (Imports) 2 days 2.75 days 11 Average time goods Clearance (Exports) 0.17 days 0.85 day 12 Average time goods Clearance (AEO’s) 0.17 days 0.61 days 13 Average border clearance time of all transactions excluding 0.13 days Not monitored IM4 (OSPB) by customs 14 Average time for examination of goods (standard & 0.75 days 0.88 days complicated) 15 Average time taken to manage offences 5 days Not monitored 16 Average transit time for non-electronically tracked goods 2 days 3.32 days 17 Average transit time for electronically tracked goods 1.5 days 1.49 days Customs average 1.497days 1.65 days

b) Average turnaround time (Time exceeds 7 days) In terms of services which exceed 7 days, the average turnaround time based on the available data is 27.5 days against a target of 22.67 days. The processing of customs refunds was within target while comprehensive and issue audits were below target.

3 Turnaround time based on DT and Customs M&E reports 15

Table 10: Performance on average turnaround time (more than 7 days) Customs Target Actual 1 Processing Customs Average 14 days Average 11.28 days Refunds/Duty drawbacks 2 Average time for completion of  40 days for  47.47 days audits comprehensive audits comprehensive audits  14 days for Issue & desk  21.2 days for issue and audits desk audits.

Observations: In terms of improving the quality of services the following observations have been made from the field assessment exercises. . Various stations have service level standards which are monitored in providing services to clients. It was noted that often non adherence is caused by system delays or delays on the part of the client, unfortunately remarks regarding progress of service are not provided for in the automated system. . Some stations do not have staff who are in position to communicate to clients in the area local languages. This affects service delivery on top of making sensitization harder. There is also need to regularly distribute updated tax literature and materials to different tax offices in local languages

2.5 Optimize Stakeholder relations

Measure: Proportion of agreed partnership expectations/actions implemented. Annual Target: 75% Actual: Not assessed Measure: Proportion of stakeholders involved in URA interventions. Target 85% Actual: 85%

The proportion of agreed partnership expectations hasn’t been assessed owing to data issues and responsibility in terms of documentation of the expectations. .

2.5.1 Stakeholders involved in URA interventions In terms of stakeholders involved in URA interventions, analysis took stock of the planned engagements with different stakeholders and the level of execution. The idea is to have URA partners participate in revenue and non-revenue interventions. Different categories of stakeholder have been involved in the interventions in different departments. These include the following; a. Political leaders including Residential District Commissioners (RDC) b. Local Government technocrats like town clerks, Chief Administrative Officers (CAO)

c. Banks d. Associations including Trader’s Association, Uganda Law Society, Uganda Manufacturers Association among others. e. Ministries, Departments and Agencies (MDAs). f. Regulatory bodies g. Private bodies h. Revenue Agencies for other countries like Kenya, Rwanda among others. i. International organization like DFID, USAID among others. j. Media groups including Journalists, Media houses among others k. Global & regional bodies including ATAF, EAC Trade & Statistics, EARATC/CG, EOI partners, OECD, ATO among others l. Revenue Agencies for other countries like Kenya, Rwanda among others

2.5.2 Stakeholder relations at station level

In order to achieve productive partnerships, offices for domestic taxes and customs adopted use of continuous sensitization of tax payers at any point of interface at the station (360 degree approach), use of information desk, corporate appreciation of taxpayers, quarterly cross boarder agency’s meeting, monthly internal agency’s meeting, use of third party information at from different organization (the hard to reach groups like the fishing communities, formal cross border trade, local leaders, influential groups, among others ) , optimization of any option for collaboration by responding to all invitations among others as highlighted below.

Table 11: Strategic partnerships engaged at station level A-Domestic Tax # Organization/group/individuals Benefits Political wind, Mayor, town clerk, Local councils ▪ To assist in mobilization of the 1 masses and to create an entry for tax education without any resistance. ▪ In addition, they support the TREP. Trader association (These include women ▪ To mobilize members (In the informal 2 groups, taxi, boda-boda, fishermen, garage, sector) as an entry for registration women in trade, among others) and compliance sensitization.

Top tax payers for each station (These include ▪ They ensure that this group remain 3 30-500 tax payer) compliant and facilitated in the best way possible.

Local government , CAO,DEO, Town clerks, ▪ For local revenue mobilization 4 sub county-chiefs, district registration officers, (TREP), Rental and information sharing National social security Fund ▪ For information sharing for tax 5 compliance Uganda coffee development authority ▪ For information sharing about 6 members and to use the platform for

registration of non-registered members.

Radio station (IUIU FM & Open gate FM) ▪ Provided free air for tax education 7 and supported tax debates for schools B- Customs Tax payers group engagements (landlords, ▪ To obtain feedback on compliance 1 NGO umbrella body, ,manufacturers, Rotary challenges and facilitate tax clubs, producer buyers) compliance among the groups.

Trader association (cross border traders, ▪ Mobilize members for tax 2 women in business groups) compliance sensitization.

Government agencies at the boarder (MAAIF, ▪ To facilitate trade and control entry 3 UNBS, LDC Security agencies, of harmful goods into the country.

Key customs stakeholder (manufacturers, ▪ To get feedback and to ensure tax 4 clearing agents, bond owners, among others). compliance as well as sensitization on new procedures and systems.

2.6 Assessment of Business Process Perspective

2.6.1 Transform processes Business Process Maturity Level, Annual Target: Level 3 Actual: 2.97 Number of unplanned system downtimes, Target: 12 Actual: 24 Performance: 50.0% System meantime to recover, Target 3.75 hours Actual: 19.9 hours Performance 18.8%

2.6.2 Business Process Maturity Level:

The assessment focuses on organisation & culture, process competencies, methodologies, technology & architecture, metrics & measures and process governance. Findings from the process maturity assessment reveal that URA is at 2.97 level of maturity. The performance of the different elements are presented in table below

Table 12: Summary of the Business process maturity assessment findings Dimension Average Maturity levels scores FY 2017/18 FY 2018/19 1 Organization & Culture 1.69 3.40 2 Metrics & measures 1.22 3.00 3 Process Competence 1.52 3.00 4 Technology & Architecture 1.36 2.40 5 Methodologies 2.15 3.00 6 Process Governance 1.61 3.00 Maturity Level 1.60 2.97 Source: Process maturity assessment

Observation: There is a significant improvement in business process maturity from 1.60 to 2.97 and this was attributed to; . Improvement of systems and workflows caused by introduction of ERP to manage the support functions of the organization in the CSD making them more efficient, sustainable and effective. . E-HUB that has provided an integration platform for data from E-TAX and ASCYUDA which is easily accessed to the users for use. . Additionally, the shifting of all Kampala offices to one central location has also greatly boosted service delivery and efficiency. Recommendation: URA is lagging behind on the dimension of Technology and Architecture. This therefore demands for deliberate action to improve Technology and architecture since this is a driving force behind modern business transformation.

2.6.3 Number of unplanned system downtimes

The assessment is mainly based on three main systems. Asycuda, e-TAX and email server. The number of times unplanned system downtimes were experienced in the FY 2017/18 were 13 as clearly shown in table 13 below. Table 13: Status on the unplanned system downtimes in FY 2018/19 Systems FY 2017/18 FY 2018/19 Asycuda 9 29 E-TAX 3 10 Mail servers 1 0 Total 13 39

The system down time is beyond URA’s control and the measure focuses on the recovery time of the core systems.

2.6.4 System meantime to recover

This measure scrutinizes different systems that support the smooth operation of URA business processes and the mean recovery time in case of a system failure to ensure that critical processes can resume or continue providing services at an acceptable defined level following a disruptive incident. These systems include e-Tax, ASYCUDA world, ASYCUDA ++, mail servers, Sun systems, Domain services, CURES, TEVIES and Scanning software.

. .In FY 2017/18, the only systems which had a downtime and thus needed to recover were the Asycuda, e-tax, mail server and procure-net and Sun system. The average mean time to recover was 34.5 hours against a target of 3.75 hours. . In FY 2018/19, the only systems which had a downtime and thus needed to recover were the Asycuda, e-tax and mail server. The average mean time to recover was 14 hours against a target of 3.75 hours. Overall, the average system meantime to recover the three years was 19.9 hours against a target of 3.75 hours.

Observation: . The system downtime is prevalent in the core processes and the meantime to recover is about 5 times higher than the target. This creates client dissatisfaction and revenue loss. Recommendation:

There is a need to fast track the IT infrastructure library system that will help monitor the behavior of system performance to guide appropriate decision making.

2.7 Assessment of Learning and Innovation

2.7.1 Improve our people Staff productivity level Target: 93% Actual: 90.53% Performance: 97.3% Staff motivation level Annual Target: 84% Actual: survey in progress Staff integrity level Annual Target: 79% Actual: survey in progress Employee stability level Annual Target: 100% Actual 98.4% Performance: 98.4%

2.7.2 Staff productivity level This is based on the revenue per staff as well as the level of work plan execution and scorecard performance. In the FY 2018/19, the revenue per staff was UGX 6.83 billion against a target of UGX 6.97 billion, a performance of 98.03%. In terms of departmental work plan execution, performance based on the fully executed activities was 87.92%.The average staff productivity in the period under review was 90.53% against a target of 93%, a performance of 97.3%.

2.7.3 Employee stability level Employee stability level illustrates the extent to which the experienced workforce is being retained. The desired is for staff not to leave before exceeding the 5th anniversary. This is key in driving the objectives of the organisation, continuity and tapping into the experiences of staff. The employee stability level is 99% which is based on the stability in 2015, which is in line with the desire for staff not leave before exceeding 5th anniversary

Table 14: Employee stability from 2015 to 2018 Year Number Still in service Permanent Stability rate Joined/recruited staff 2015 319 314 98.4% 2016 22 22 100% 2017 40 36 90.00% 2018 193 188 97.41% 2019 100 99 99.00% Source: Human Resource reports 2019

Observations : In improving the people objectives, there were some areas of improvement and observation that were highlighted in the field work assessment in regards to staff motivation. Some of the key observations made included the following. . The staff motivational initiatives were rated as being fair. Great appreciation was expressed for the comprehensive insurance. It makes upcountry staff who are always on the highways to check on their families a bit comfortable. . Change management is required to prepare staff for changes in terms of transfers, changing roles among others.

. Need to improve on the feedback mechanism from management to staff on the various issues of concern that are constantly raised. . Transfers are always healthy and welcome as long as they are perceived not to be selective and a punishment to some staff. . The provision of staff lunch is another initiative that is appreciated by almost all staff. . 47.9% of the staff rate their jobs as being greatly interesting, 45% argue that jobs are interesting to a small extent, while 3.5% of the staff don’t find their jobs interesting. . 80% of the staff feel that a lot of improvements can be made in terms of providing feedback to staff for concerns and issues raised.

Recommendations : . Staff productivity can be enhanced with regular training of staff to acquire contemporary requisite skills under the changing processes, technology and working environment . Employee stability can be improved by regular surveys on staff expectations and then endeavoring to meet them in the form of emoluments, benefits and facilitation . Work plan execution performance is highly affected by changing priorities along the FY. It is imperative that the business owners stick to the plans formulated at the beginning of the FY and steer clear of temptations to divert resources to unplanned activities. . Staff integrity levels should be monitored on annual basis through funding independent surveys to avail data for tracking the performance of this measure

3.0 Progress of the Projects

The summary below provides a comprehensive status of projects that have been implemented during the FY 2018/19

Table 15: Progress on URA projects implemented in FY 2018/19 Project Progress

Electronic single The team completed phase I of the Uganda Electronic Single Window (UeSW) window and additionally conducted support work to system users in the various system modules rolled out.

Completed the planning and harmonisation of the initial activities needed for phase II and hence developed a work-plan with strategies for Electronic Single Window project phase II.

Conducted a number of engagements with both internal and external clients on several issues about Uganda Electronic Single Window including: i. Critical issues that remained pending after implementation of phase 1 of the project. ii. Review of the post phase I implementation strategy iii. Benchmarking on implementation strategy of phase I, its progress and success story. iv. Trainings on Uganda electronic Single Window. v. Meetings to plan for Single Window. E - invoicing and Signed contract with Electronic Fiscal Devices (EFD)/e-Invoicing solution Digital Tax provider on 15th January 2019 Stamps project Developed, reviewed and signed off Digital Tax Stamps User Requirement Specification Document V2.

Conducted technical site visits to various manufacturers and other possible stakeholders of DTS as a precursor to system installation and customization of equipment. These site visits were also for accessing readiness of manufacturing industries for DTS.

Commenced installation of DTS solution equipment with URA and the process is being rolled out to other organisations.

Tax payer During the concluded financial year 92,619 new taxpayers were registered Register against a target of 113,675 new taxpayers performing at 81.15%. These Expansion contributed UGX 30.05 billion to the collections for the FY 2018/19 against a Programme target of UGX 40.50 billion with a performance of 74.19%. (TREP)

Coordinated the taxpayer registration by undertaking initiatives to detect unregistered businesses and individuals by: i. Development of a framework to guide matching, analysis and sharing of information from the collaborating institutions. ii. Setting up teams to analyse and use information from the collaborating institutions to identify unregistered taxpayers.

Commenced the data matching process with Uganda Revenue Authority (URA)’s rental data and Kampala Capital City Authority (KCCA)’s property tax register.

Initiated, followed up and obtained National Information Technology Authority (NITA-U)'s approval for the procurement of consultancy services to develop and deploy the registration interface for TREP institutions.

Conducted register expansion activities that involved development of a plan for joint enforcement in Kampala between Kampala Capital City Authority (KCCA), Uganda Registration Service Bureau (URSB) and Uganda Revenue Authority (URA); and the commencement of the joint enforcement activities in the 23

Project Progress

different divisions of Kampala including: Kawempe, Rubaga, central and Nakawa.

Coordinated One Stop Shops (OSSs) activities including: i. Provision of consumables for OSSs including enforcement gadget ii. Provision of remuneration to OSS staff iii. Provision of transport facilitation for OSS.

Conducted stakeholder engagements in selected municipalities successfully engaging the political leaders, traders and communities about TREP so as to: i. Persuade them to be the program's ambassadors. ii. Promote business formalization through different strategies including TIN registration, trade license and presumptive tax in general iii. Bridge the gap between the traders, Uganda Registration Service Bureau (URSB), Uganda Revenue Authority (URA) and Kampala Capital City Authority (KCCA).

Conducted training of the technical committee in project appraisal and risk management in South Africa at Prince Top Academy for 7days.

URA Head - The project attained practical completion on November 26, 2018 with issuance quarter Building of a Certificate of Practical Completion by the project manager. To that effect, Project the overall physical work progress is at 100.00% and actual period-wise progress is 100.00%. The building project was thus commissioned by His Excellence Yoweri Kaguta Museveni the President of Uganda.

Construction and Re-surfacing of the Walusimbi Close (an alternative access to URA new building) was conducted and concluded.

The project commenced the defects liability period which is expected to end in November on 25th in the year 2019. This is the set period of time after construction during which the contractor is expected and has the right to remedy defects on the building project. E-hub Completed the end user test sprint for the taxpayer profile and the customs entry trail.

Conducted testing of the flagged returns from the anomaly return detection.

Completed Iteration 5 developments and user acceptance testing.

Conducted a data analysis campaign code named “balance the boat with data.”

Continued development of articles for the closure magazine.

Developed a draft project closure magazine design and a draft project closure report.

Conducted the final Independent quality assurance review mission. Enterprise Launched and rolled out phase II modules (i.e. Finance, Procurement, resource planning Inventory, Estates and project Management) and conducted Phase II End User (ERP) Training for system super users and upcountry stations which included western, northern, and eastern regions.

Completed data cleaning, migration, validation and reconciliation process in different phase 2 modules, especially the finance related modules.

Commenced Phase 3, which involved implementation of Document Management System (DMS) by successful of completion of the familiarities session, requirements gathering and the solution design for Hyperion and Document Management System (DMS).

Conducted change management initiatives to all URA staff about the rollout and use of Enterprise Resource Planning (ERP) Phase 1 & 2 modules.

Project Progress

Conducted User Acceptance Testing for Oracle Advanced Benefits module (Medical Enrolment functionality).

Launched and rolled out Taleo recruitment (e-recruitment system) which is being used by staff to apply for jobs.

4.0 Progress on the implementation of Tax administrative Measures for 2018/19

The summary below gives the overall status on the implementation of key administrative measures for FY 2018/19

Table 16: Tax administrative measures in FY 2018/19. No Administrative measures Status in FY 2018/19

1  Expansion of withholding tax net  Expanded the withholding tax net for suppliers from 392 taxpayers as at July 2013 to 5004 taxpayers as at July 2018. This was an additional 4612 taxpayers

2  Strengthen Business Intelligence function to  Formed a mobile intelligence function with detect non-compliance. the mandate of; making advance income tax  Strengthen Risk management function. Deploy drives on commercial vehicles, conduct the enterprise risk tool to all critical stations. rapid response operations together with TID and LSBA on frauds and tax offenders and identify areas of revenue leakages using available data and third party information.  Created the Central Operation Center in Domestic tax Department to strengthened business intelligence. Using the e-hub data, the team conducts business intelligence and identify areas of non-compliance and revenue leakages and recommend for enforcement.

 To strengthen risk management, the following initiatives were implemented; developed a tool to automate the risk register, trained internal staff on risk identification using the available tool, developed a concept note to automate the risk register and integrated the management tool into the e-hub system under iteration 4 to help identify compliance risk. 3  Expand Block management system to cover  The block management system is other potential revenue geographical areas maintained within Kampala Metro because beyond Kampala its expansion plan was not funded by government. 4  Enhance Arrears management structures to  Arrears management structures was through recover more debt. Dedicate more staff to third party agency notices, client physical Arrears enforcement visits and engagement with taxpayers. Total domestic and customs arrears stock as at 30th June 2019 was UGX 3,525.40 of which UGX 695.33 billion was recovered.

 In a bid to strengthen debt collection, DCU conducted; supervision of auctioneers, media publication of tax defaulters, enforced

on bounced cheques and conducted field visits within the Kampala Metropolitan region, Western Region and South Western region and sealed premises. UGX 92 billion was collected in revenue.

5  Implement valuation controls and close  Reviewed the valuation database and monitoring of TSCs adherence through proposed adjustments were made as a attachment of staff as attaches to embassies of measure for valuation for valuation control. China, India, and Dubai (UAE) However close monitoring through attachment of staff at embassies was not funded and couldn’t be implemented.

 However internally, during FY 2018/19, 19,655 Tariff Specification Codes were generated leading to additional revenue of UGX 243.43 billion. 6  Increased Intelligence focused Enforcement  289 intelligence focused operations were operations to cub smuggling, concealment conducted during the FY 2018/19. In addition, 9,152 seizure were made resulting to a recovery of UGX 78.48 billion in revenue.

7  Deployment of the scanner at the major entry  The deployment of scanners was stations and to scanner more than 50% of the operationalized at Entebbe, Malaba, Busia cargo. and Mutukula. Also purchased more electronic seals that led to increase in the proportion of electronically monitored goods from 19% in FY 2017/18 to 21% in 2018/19. 8  Increase Risk Based post clearance Audits  During the FY 2018/19, a total of 282 audits targeting specific sectors. (181 comprehensive, 101 issue) against a target of 324 audit (192 Comprehensive, 132 issue) risk based post clearance audits were completed. Total assessment from the audits amounted to UGX 134.80 billion of which UGX 74 billion was agreed upon to be paid. 9  Gains from rental income  Conducted door to door registration, data analysis and third party information to identify and register rental taxpayers. Rental tax collections were UGX 115.23 billion during the FY 2018/19. A new rental tax unit was created to increase enforcement on non-compliant taxpayers all over the country. 10  Gains from the monitoring system of the  Procurement of the telecommunications telecommunications sector monitoring system by government is still ongoing. 11  Other administrative measures  Implemented the Tax payer Registration Expansion Program (TREP) and Block Management major initiatives to expand the tax base and registered (166,663) new taxpayers and 58,415 value taxpayers realizing 34.34 billion in revenue.  Conducted 142 domestic compliance audits and 3,766 returns examinations recovered UGX 18.44 billion.  Conducted investigations to 88 cases to mitigate the identified fraud. This identified revenue worth UGX 62.51 billion.

5.0 DEPARTMENTAL PERFORMANCE FY 2018/2019

The results below provide a summary of the performance assessment of departmental indicators and progress towards the intended objectives. A comprehensive analysis was carried out to ascertain departmental progress towards the annual targets and activity execution. This is because the level of activity execution drives the performance of indicators;

5.1 Legal Services and Board Affairs departmental performance assessment

Table 17: Table: Legal Services and Board Affairs departmental performance Assessment of LS&BA Indicators Performance Rating

% of the annual outputs that were achieved 100%

Actual budget utilized against budget allocated for the FY 2018/19. 100%

Table15.1 : LSBA work plan activity execution in the FY 2018/19 Rating Card Activities executed Performance Rating (%) Fully Achieved 90 100% Total 90 100%

LS&BA utilized 100% of its budget and achieved 100% of the targeted output during the period of FY 2018/19. This was sustained by 100% level of activity execution level in the year.

Box 1: FY 2018-19 Work plan Performance Assessment for LSBA Department A- Areas that registered good progress during FY 2018/19

† During the FY 2018/19 arrears portfolio reduced by UGX 91 Bn against a target of UGX 80 Bn and a performance of 114%. To strengthened debt recovery: Legal Services and Board Affairs (LSBA) visited 6 regions; Kampala Metro, Western (Masaka, Mbarara, Kabale and Bushenyi), south western (Hoima, Misindi, Fort portal and Kasese), Northern region (Lira, Kitgum, Gulu, Nebbi, Arua, Moyo and Koboko), Mid-Western region (Mityana and Mubende), Central region (Kampala Metro, Kampala South, Kampala East, Kyaliwajala, Entebbe and Mukono, Kampala North, Nansana) and Eastern region (Jinja, Iganga, Tororo, Mbale, Soroti, & Busia).It also sealed 550 premises, supervised 573 auctioneer activities, drafted 415 M.O.U besides enforcing on 62 dishonored cheques.

▪ Out of the 88 cases Judgment made, 74 cases were judged in favor of URA representing 84% success rate against a target of 65%.

▪ Coordinated with Departments and compiled proposals for the amendment of tax laws for FY 2019/20 through Inter departmental Tax Policy workshop for FY 2019/20 which was held on the 12/12/2018. There is ongoing discussion with MoFPED on a number of policy issues.

In addition, there has been full participation in the formulation of policy and in the process of drafting the relevant Bills with the First Parliamentary Counsel and the following bills have been tabled before Parliament for the first reading; (a) VAT (Amendment) Bill 2019, (b) ITA (Amendment)Bill 2019, (c) TPC (Amendment) Bill 2019, (d) Excise Duty (Amendment) Bill 2019, and (e) Stamps (Amendment) Bill 2019

▪ To improve the quality of legal services; LSBA issued out 110 legal opinions, signed 228 contracts, signed 41 tenancy and 69 bonding agreements, held 59 contract committee meetings, conducted 21 contract evaluations, organized board meetings and proceedings, implemented protection/titling of URA properties, monitored litigation cases and reported to the MEC and the board, carried out timely litigation activities such as (risk profiling and prepared pleadings) and prepared a report on tax value under dispute and a total of UGX 489.61 billion from 90 cases were disputed.

▪ To improve LSBA people, it held planning engagement , departmental meeting, one team building event and review engagement to improve performance, commended outstanding performers and trained all staff in different areas (exchange of information, development in tax, labour, industrial and company law besides legislative drafting , letter writing, Practice Management Training, Developments in Construction Law, Training in skills for effective Corporate Secretary Practice, Continental free trade area-Challenges, opportunities for the legal profession, Insurance policies and claims, and Contract Management. B- Recommendations . LSBA together with DT and Customs should consider looking at the root cause of the disputed assessments and think of administrative measures or mediation other than litigation for cases that can be resolved because this is holding a substantial amount of tax not paid under dispute. . LSBA together with DT should consider the use of management letters to taxpayers to reduce on the case log and arrears. . LSBA should consider compiling risks identified during the court undertaking and share them with DT and customs for consideration to minimize on the similar case being raised again. . There is need to share the risk register developed with the corporate risk management function for further management.

5.2 Office of the Commissioner General’s performance assessment

Table 18: Office of the Commissioner General’s performance Assessment of CGO Indicators Performance Rating

% of the annual outputs that were fully achieved 62.50%

% of the annual outputs that were partially achieved 37.50%

Actual budget utilized against budget allocated during the FY 2018/19. 100%

Table16.1 : CGO work plan activity execution in the FY 2018/19 Rating Card Planned Activities Performance Rating

Fully Achieved 210 88.61% Partially Achieved 23 9.70% Not Achieved 4 1.69% Total 237 100%

CGO utilized 100% of its budget and fully achieved 62.50% of its output targets during the FY 2018/19 while 37.50% were partially achieved. This was sustained by the level of activity execution which was at 88.61% for fully executed activities, 9.70% were partially achieved and 1.69% not achieved as planned.

Box 2: FY 2018-19 Work plan Performance Assessment for CGO office

A- Out puts that were fully achieved in the FY 2018/19

. CGO Resource accountability reports prepared and shared before target time (These included 4 M&E reports, 4 Human capital development reports and 3 Budget performance reports). . CGO plan 2019/20 was compiled, completed and submitted (For BFP - 8th Oct, revised after MPS - 13th May) . Quarterly plans review engagements held - 5 in PCA (Approach mainly in RPD and EO - reviews done on line and one on one engagements) . Cost saving / optimization initiatives executed (165 free media airtime secured saving over UGX 400m, Capacity sponsorships obtained for 11 staff saving over UGX 160m , 24 events sponsorships obtained saving over UGX 1.2 billion ) . Service support programs executed (Feedback tools reviews, Know your client campaign executed and star client centric staff rewarded) . Mid-western region branding undertaken and completed . 6 PR Outreach programs executed (Open minds forum, 19 PR visits, 7 regional consultative engagements, women outreach, 26 benchmarks supported) . Media initiatives executed (115 radio/TV shows, 50 stories, 13 press conferences, online media with 92.3% response rate)

. Four (4) URA brand showcase & visibility initiatives executed (URA products promoted/activated during Sports & games outings - activations for TIN registration were carried out at Corporate League, The URA App; Visibility items procured - Banners, branded clocks, seasonal cards; Because of u campaign executed, Standard return filing campaigns executed towards filing dates . Tax Payer Appreciation programs executed which attracted over 1,500 participants (Regional visits to most compliant tax payers and luncheons with stakeholders, TPAD exhibitions done by different MDAs to account for taxes mobilized and promote private sector stakeholders. In addition URA tax education exhibitions incorporated NUDIPU representatives to offer sign language services, Press conferences were held and Tax payer appreciation dinner held and taxpayers/stakeholders awarded) . Government Ministries, Departments & Agencies engagement initiatives executed and 100% partner expectations met of funding, technical support, more media airtime, sponsorships, free publicity space, tax education platforms, research support, advocacy (with MoFPED, UBOS, GCOF, KCCA, NPA, UNRA, PSFU, Parliament/MPs, OPM, Ministry of Education among others) . Development partners engagement initiatives executed and 100% partner expectations met of funding, technical support, research support, advocacy (World bank, USAID, IMF, IGC, UNUWIDER, OECD, DFID, DANIDA, EU, Maastricht, ICTD among others) . Private sector associations & professional bodies engagement initiatives executed and 100% partner expectations met at Tax education platforms, advocacy ( with KACITA, YAFU, UWEAL, USSIA, Chess academy, UNAB, UNBA, NUDIPU, Entebbe Municipal forum) . Media groups engagement initiatives executed and 100% partner expectations met of positive publicity, advocacy, free media airtime (Journalists, Media houses among others) . Global & regional bodies engagement initiatives executed and 100% partner expectations met of technical support, information (ATAF, EAC Trade & Statistics, EARATC/CG, EOI partners, OECD, ATO among others) . Internal stakeholder support initiatives executed (Strategy review engagement held, over 40 engagements held with departments/business units for technical support, information sharing, 24 MEC engagements coordinated/held, informer management initiatives executed, events coordination, travel support) . Process reviews, standardization & documentation initiatives executed (Corporate/departmental risk registers maintained, process reviews - business processes profiling carried out, procedures for regular and systematic updating of publically available information, procedures to review FAQs and management reports resulting from these reviews as part of the PCA processes manual, more than 80% of Departmental audit queries resolved)

. Communication & Information management initiatives executed (6 publications, 3 inventories maintained, 51 e-communications) . 9 Researches & studies conducted . URA 2027 Visioning concept and tax academy proposal developed . CGO staff motivation/engagement programs executed (Departmental meeting held, 26 Divisional meetings, quarterly staff rewards & recognition executed, divisional team building engagements, weekly inspirational messages shared) . Corporate motivation/engagement programs executed (CG's rewards to staff for excellent performance, 2 CG staff engagements, 4 staff mobilization campaigns, sensitizations held on tree planting and trees were planted across the country) . CGO staff capacity building programs executed (46 Knowledge sharings conducted, 90% execution of training plan, membership subscriptions to 10 professional bodies)

B- Out puts that were delivered beyond the set target

. Corporate & statutory reports & plans submitted (Annual reports - 10 (98%); Bi-annual reports - 3 (100%); Quarterly reports - 30 (93%); Monthly reports - 12 (100%) . Assessments and evaluations initiatives executed (Validation exercises/Mid-term review done, Business Process Client Value satisfaction assessment, Power assessment, Business process maturity assessment, Assessment to look out for gender based issues and complaints done through social media & key events, Client satisfaction survey was underway by the end of FY 2018/19) . CGO performance management programs executed (CGO management engagements, 18 RPD Management engagements, 38 PCA Management engagements, performance management mechanisms, 95% agreements completed on time, 80% appraisals completed on time) . 57.18% MEC engagements held compared to target.

Recommendation CGO should ensure optimum execution of it planned activities with its equivalent to budget utilization. Since the budget utilization was 100%, activity performance should as well perform in equal measure

5.3 Tax Investigations performance assessment

Table 19: Tax Investigations departmental performance Assessment of TID Indicators Performance Rating

% of the annual outputs that were achieved 100%

Actual budget utilized against budget allocated during the FY 2018/19 100%

Table 19.1 : TID work plan activity execution in 2018/19 Rating Card Planned Activities Performance Rating (%) Fully Achieved 88 100%

Total 88 100%

TID achieved 100% of its output indicators and utilized 100% of its annual budget. This was maintained by the 100% level of fully achieved activities.

Box 3: FY 2018/19 Work plan Performance Assessment for Tax Investigation Department A- Areas that registered good progress during the FY 2018/19

 88 cases resulting into recoverable revenue worth UGX 62.51 billion forwarded to collection departments for assessment.  Conducted follow up investigative cases on VAT tax payer behaviour in FY 2018/19 as a result of investigations into their VAT declarations in FY 2017/18.  Conducted Exchange of Information, investigations and audit interventions with support from treaty partners i.e. Kenya, South Africa, Mauritius and the United Kingdom that resulted into tax liability payments worth UGX 5.10 billion.  In conjunction with the African Tax Administration Forum (ATAF), held the first ever Science Model workshop that was attended by 102 delegates from 15 African Tax Administrations which provided a platform for knowledge sharing on the role of science in enhancing tax compliance aimed at provision of alternative revenue recovery measures to support the conventional methods.  For the FY 2018/2019 The Tax Investigations department generated and disseminated 16 Intelligence Briefs providing details on untaxed revenue and highlights on revenue leakages. These included:  (Missing trader (VAT fraud) impact analysis, withholding tax on agricultural supplies, loss making schemes in the sugar manufacturing industry, mobile phone dealership services models, sugar smuggling and related schemes, evasion schemes of sugar industry distributors, PAYE non-compliance, compliance risks associated with income tax declarations, cross-border cash movement, tax evasion risks in the importation of software, outcomes of the intervention against input VAT arising from fictitious imports, falsified remittances by a group of companies, non-compliance affecting income tax with emphasis on Corporation tax, vulnerabilities and threats to stamp duty collection: a case study of land, compliance assessment of importation, temporary importation and boarded off motor vehicles, potential compliance risks paused by alternative payment methods88 out of 75 planned investigations cases were concluded by end of quarter three and this resulted into a revenue yield of UGX 96.14 Bn.

 To improve the quality of intelligence services: TID addressed 100% of the client issues raised, facilitated the exchange of information with the participating partners, provided technical support through provision of intelligence, science and forensic and identified risk in the targeted population.  Business process interventions implemented include; E-tax investigations module, OC return schedule, digital stamps, monitored adherence to standards for (investigations, exchange of information, digital forensic, document examinations, information management and client processes), established the AEO implementation committee from MDA’s, developed user requirements for intelligence management system, conducted GIS needs assessment, an intelligence collection task allocation module, creation of a persons of interest module, developed the database, mobile application and web application, designed the applications integrating platform, graphical user interface for the data entry has been developed and the prototype system is being tested by a few users and recruited 10 information sources.  To improve our people, conducted On Job Training (OJT) and technical trainings on; (performance management, benchmarked on criminal and civil investigations, certification in Mobile forensics, , advanced excel, tally training, steel sector, E-hub, IDEA, operational analysis, tax audit, ERP, planning and budgeting ,criminal procedure, cybercrime security and intelligence, custom procedure and tariff classification, how to use Simba system, understanding WHT,VAT, income tax return analysis and report writing, rolled out PODITI trainings, implemented wellness and motivational initiatives ).  To optimize stakeholder relations, the interventions implemented were; represented URA at the technical working group engagements like; (Eastern and Southern Africa Anti-Money Laundering Group (EASAAMLAG), Uganda Bureau of Statistic(UBOS), Financial Intelligence Authority (FIA), National lottery board, UN security council, National Social security Fund (NSSF), First parliamentary council (FPC),NEMA, World Bank, African Tax Administration Forum (ATAF), Organisation for Economic Cooperation and Development (OECD), Groplife Uganda, food and fortification, Uganda National Bureau of Standards (UNBS)), hosted Tanzania Revenue Authority on a benchmarking visit. Also held engagements and signed MOU’s with Uganda Investment Authority, Uganda Law Society, and the Embassy of the Republic of China and Office of the President. Lessons learnt and best practices where shared between the partners. B- Recommendations ▪ Consider carrying out impact assessment of the cases investigated.

5.4 Customs Department performance assessment

Table 20: Customs departmental performance Assessment of Customs Indicators Performance Rating

% of the outputs that were fully achieved. 65.22%

% of the outputs that were average. 17.39%

% of the outputs that were not achieved 17.39%

Actual budget utilized against budget allocated during the FY 2018/19. 100.00%

Table 20.1 Customs work plan activity execution in FY 2018/19 Rating Card Planned Performance Rating Activities Fully Achieved 128 78.05% Partially Achieved 18 10.98% Not Achieved 18 10.98%

Total 164 100%

Customs utilized 100.00% of its allocated budget and achieved 65.22% of the output indicators while 17.39% were average (partially achieved) and 17.39% were not achieved during the FY 2018/19. This performance level was supported by the level of activity execution which was at 78.05% for fully executed activities, 10.98% were average and 10.98% were not achieved.

Box 4: FY 2018/19 Work plan Performance Assessment for Customs Department A- Areas that registered good progress during FY 2018/19 o Collected UGX 6,883.98 billion against a target of UGX 6,875.07 billion, a performance of 100.13%. Customs surplus for the FY 2018/19 was UGX 8.91 billion. o 12 monthly revenue reports were prepared and submitted to Customs management for further action during FY 2018/19. o 1st quarter, 2nd quarter, 3rd quarter and 4th quarter Customs M&E reports were generated in the month after that quarter and submitted to Customs management for further action. o 02 Customs Council meetings for all Customs management staff (i.e Commissioner, Assistant Commissioners, managers, Supervisors and station in charges) were held in July 2018 and May 2019 to discuss strategies of Revenue mobilization in the Department. o Arrears portfolio was reduced by 37.33%. o Over 14,000 Tariff Specification Codes were generated leading to average additional monthly revenue of UGX 16.92 billion. o 100% verification of clearing agents premises & facilities was carried out. o Risk level on real time were mitigated through the 3,503 risk alerts and risk profiles that were generated leading to a recovery of Ushs 58.41Bn o 324 Post Clearance Audits were completed

o Operationalized 2018/19 Customs work plan and developed the FY 2019/20 departmental work plan o Developed and operationalized Customs Valuation Database. o Automated and operationalized the audit activity using the Customs Audit tool. o Developed and submitted policy proposals for FY 2019/20. o Fully rolled out of Exports under SCT procedure. o Reviewed customs compendium version 2. o Developed and updated customs risk register. o Automation of Audit activity was done and operational using the Customs Audit tool. o Tax clinics and radio talk shows were conducted in different regions i.e; Central, Eastern, Northern, Western and Southwestern. o Full roll out of SCT clearance. o Refunds/Duty drawbacks received during the fourth quarter were processed with 13 days from the date receipt as per stipulated timelines of processing. o Objections and disputes were resolved within the stipulated timelines o Held engagements with the groupage cargo importers o A Customs risk register was developed in all stations and was always updated on a daily basis. o Customs Compendium - Verson 2 was reviewed, concluded and launched during the Customs Council meeting held in July 2018 o Monthly Divisional reports on the KPIs performance were compiled and submitted to Customs Management o Monthly Customs integrity messages were sent out to staff by customs management. o Staff integrity sensitizations are conducted during staff On Job/refresher trainings. o The funded trainings have been implemented in the customs training planner B- Slow progress registered in FY 2018/19 . Hold plans review engagements . Prepare & submit Customs plan 2019/20 . Prepare & share 3 monthly Customs expenditure reports . Implement Valuation controls: Review of the Valuation database was done and adjustments proposed for management discussion before operationalizing. . Review 48 selectivity criteria . Conduct 150 Intelligence focused operations per month . Track 20% of cargo electronically . Installation and maintance of Automatic Number Plate readers,CCT Cameras, Smart Gates and fuel sensor . Setup a client service management unit to support DPC operations

C- Recommendations o A client service management unit to support DPC operations should be approved of the Departmental structure by Corporate Services. o Provide funding for procurement of Customs warehouse management system o Provide enough funding to Uganda Electronic Single window platform so as to be able to add agencies onto the platform o Provide funding for the installation of Automatic Number Plate readers, CCT Cameras, Smart Gates and fuel sensor o Hold regular plan review meetings and engagements so as to keep on track with planned priorities.

5.5 Internal Audit and compliance department performance assessment

Table 21: Internal Audit and Compliance departmental performance Assessment of IAC Indicators Performance Rating

% of the annual outputs that were fully achieved 100%

Actual budget utilized against budget allocated during the FY 2018/19 100%

Table 21.1: IAC work plan activity execution in the FY 2017/18 Rating Card Planned activities Performance Rating Fully Achieved 43 93.48% Partially achieved 2 4.35% Not achieved 1 2.17% Total 46 100%

IAC utilized 100% of its budget and achieved 100% of the output indicators. This performance level was supported by the level of activity execution which was at 100% for fully executed activities achieved for the FY 2018/19

Box 5: FY 2018/19 Work plan Performance Assessment for Internal Audit and Compliance Department. A- Areas that registered good progress during the FY 2018/19  Conducted all 22 Stakeholder engagements programmes with the planned external & internal strategic stakeholder engagements .These were; Customs trade, Business policy, Customs systems and procedure, Integrity workshop, Human resource, Tanzania Revenue Authority, Customs valuation, Headquarter service office, Magistrates court Nakawa, DT refund unit, DT management, Business process unit, Tariff unit. RDP division and RPD risk management team.

 Implemented Integrity Public Awareness through 2 External Integrity Workshops, 6 Print media Publications, 10 radio Announcements, 2 Radio Talk Shows and TV talk-shows.  Implemented 94 audit reports, 60 Investigations Reports,8 Compliance Reports and 1 Life style Audit  Implemented system updates and Upgrades by adding 2 URA business processes added to case ware.  Implemented communication & information Management initiatives through 40 copies of statutory reports printed, 8 statutory reports uploaded on IAC page and 4 consultancy newsletters.  Implemented 24 staff motivation programs through staff rewards and recognition.  Implemented two communication programme using five communication channels.  Implemented all the planned integrity awareness inventions.  To improve IAC people, it implemented the following: rewarded and recognized staff , trained in single customs territory, conducted OJT’s and knowledge sharing sessions and these included; (IDEA, data analysis, ledger reconciliation, use of ERP, Legal Tech conference, litigation, pentana, risk management , Income tax returns, Thin Capitalization, Pentana refresher, financial literacy E-hub analysis, and corporate governance). IAC also developed staff skills gap, paid annual subscription for CIPs, ACFE,  Verified and updated audit and compliance query responses using excel and PAWs.  Ensured adoption of 90% of the compliance review findings by clients. B- Recommendations  Consider carrying out impact assessment of the integrity messages shared.

5.6 Corporate Services department performance assessment

Table 22: Corporate Services departmental performance Assessment of CSD Indicators Performance Rating

% of the outputs that were fully achieved. 33.33%

% of the outputs that were average. 66.67%

Actual budget utilized against budget allocated during the FY 2018/19 100%

Table 22.1 CSD work plan activity execution in the FY2018/19 Rating Card Planned Activities Performance Rating (%)

Fully Achieved 215 78.75%

Partially Achieved 27 9.89%

Not Achieved 31 11.36%

Total 273 100.00%

CSD utilized 100.00% of its budget and fully achieved 33.33% of the planned outputs while 66.67% were partially achieved during the FY 2018/19. The level of CSD activity execution was at 78.75% for the fully executed activities while 9.89% were partially achieved and 11.36% were not achieved during the year.

Box 6: FY 2018/19 Work plan Performance Assessment for Corporate services Department A- Areas that registered good progress during the FY 2018/19 ▪ Snagging of the URA tower and compiled a snag list; Attended to identified snags by the contractor; Extended the fence at MUBS; Integration of the Building Management System with the installations as at 80%; Procured imported furniture for Senior Management, Board rooms, and Public areas; Prepared and submitted monthly performance reports to the Project Manager ▪ Submitted the financial statements to the Accountant General ▪ Gathered audit evidence in relation to management of Audit queries from divisions in CSD. This was submitted to internal audit for verification and submitted documents required by Auditors for the audit of financial year 2018/2019 ▪ Exit meeting on procurement methodologies was held on 31/05/2019 and Audit on televisions and disposal of assets vis-a-vis the procurement manual were held ▪ Audit queries; Estates: Status of Oraba Station: RPO was raised, Procurement was concluded and the works are ongoing. ▪ Supply of furniture to Lwakhakha: Furniture from stores was delivered to the station. ▪ Staff parking: Additional parking slots were created both behind and in-front of the tower ▪ Vehicles with outstanding parking fees, repairs on vehicles recommended for disposal and stand-by generator for DT liaison offices were all resolved ▪ Prepared and uploaded the financial year 2019/20 budget in ERP on 29th June, 2019. ▪ Procurement Plan 2019/20 completed in May 2019. ▪ Prepared and submitted all the statutory reports: final accounts, BFP 2019/20, MPS 2019/20, half year financial statement to Accountant General and MEC, URA annual report to the Office of the Auditor General, PBB report. Also produced other quarterly reports like; budget performance, Response to COSASE , responded to audit queries, M&E, procurement, IT service, expenditure saving, revenue , human resource and administration report. ▪ Conducted 18 out of 18 planned service management sensitization and include; contract management, insurance, accounting manual, financial procedures, Public Procurement and Disposal of Assets(PPDA) regulations, records management procedures, fleet management system, the new human resource processes and IT policies. ▪ Completed the procurement of IT equipment, renewed and maintained software licenses and contracts and provided support to departmental initiatives like; Electronic Fiscal Devices (EFDs), Tax payer Registration and Expansion Project (TREP).

▪ Prepared the Financial inputs for Q4 M&E accountability/performance report that was input in the PBS system ▪ The front loading of approved procurements was completed in the 1st month of the FY 2018/19. ▪ Prepared and submitted FY 2018/19 half year financial statement to Accountant General and MEC ▪ Submitted weekly IT services performance reports to CSD Management ▪ Submitted weekly Admin performance reports to CSD Management ▪ Prepared monthly HR Board Reports by 10th of the next month ▪ Weekly HR reports submitted to CCS. ▪ Conducted training and case by case or individual support trainings done as and when a request is done. ▪ Operationalized the remote support tool and its license renewal. ▪ Held engagements with various medical service providers in preparation for the Medical enrollment for FY2019/20 ▪ The URA Museum was commissioned and it is now operational. ▪ Carried six penetration testing on etax, Asycuda, Asycuda test, Park fees and ERP; Carried out vulnerability assessments and remediation various servers; exchange, lynch; Maintained a current patch level for all Windows based URA servers which reduced our susceptibility to IT Security Compromises; Carried out phishing campaign to assess the level of IT security awareness for Mbale and Soroti; Patched the M7 and T-44 cluster services ▪ CCTV cameras have been monitored and various culprits apprehended ▪ Activated the bio metric cards for each staff. Enforced the issuance of visitors' access cards, and staff IDs displayed ▪ Personnel were deployed for surveillance, guard duties, escorts and any other assignments. ▪ Procured new X ray baggage scanner and Quantum Sniffer to improve security

B- Slow progress in following areas ▪ Conducting computer equipment needs assessments across departments. ▪ Solution build for: Hyperion Planning; Document Management System and Procurement modules ▪ One sample scanner was procured upon advise that test if it will be compatible with the system and the rest will be bought after ▪ Purchase of a new platform and software to support eLearning programs. ▪ Remodeling of training school at new premises; the rooms have been remodeled and painted accordingly.

Recommendations . Resolve the rampant network challenges to support e-learning . Complete the super user assessment and the related communication campaigns. . Update the CSD risk register . Computer needs assessment should be reviewed and implemented . Complete the development of I.T security incident management process . Reviewed CSD processes should be approved for operationalization

5.7 Domestic Tax department performance assessment

Table 23: Domestic Taxes departmental performance Assessment of DT Indicators Performance Rating

% of the outputs that were fully achieved. 13.33%

% of the outputs that were average. 60.00%

% of the outputs that were not achieved 26.00%

Actual budget utilized against budget allocated during the FY 2018/19. 100%

Table 23.1 DT work plan activity execution in the FY 2018/19 Rating Card Planned Activities Performance Rating Fully Achieved 142 54.20%

Partially Achieved 22 8.40%

Not Achieved 98 37.40%

Total 262 100%

Domestic tax budget utilization during the FY 2018/19 was at 100.00%. It achieved 13.33% of the output indicators while 60.00% were average (partially achieved) and 26.07%% not achieved. This performance was attributed to 54.20% for fully executed activities while 8.40% of the activities were partially achieved and 37.40% were not achieved during the FY 2018/19.

Box 7: FY 2018/19 Work plan Performance Assessment for Domestic Tax Department A- Areas that registered good progress during FY 2018/19 ▪ Net Domestic Taxes collections amounted to UGX 9,749.29 billion against a target of UGX 9,483.69 Bn, registering a surplus of UGX 265.60 Bn. The surplus is attributed to several initiatives including arrears recovery initiatives which yielded UGX 109.79 billion from PAYE and growth in the economy by 6.1% compared to 6.0% registered in FY 2017/18. There was also increase in demand for private sector credit to 12% from 6.8% in FY 2017/18. ▪ For compliance improvement programmes , the following were realized;

a. Tactical audits involved in an in-depth examination of a taxpayer’s business records and financial affairs. In the year 2018/19, DTD completed 142 tactical audits (Issue and Comprehensive), from which tax amounting to UGX 158Bn was assessed and UGX 15Bn were recoveries as at year end. b. Kampala Metro block register was 96,158 taxpayers as at end of FY 2018/19. c. 7,946 compliance advisories were executed during the FY 2018/19. Tax worth UGX 411 Bn was assessed with UGX 63 Bn being objected. This performance is mainly attributed to creation of a Central Operations Office (COO) which handled over 97% of the advisories. d. Gross Domestic Taxes collections for FY 2018/2019 amounted to UGX 10,074.13Bn against a target of UGX 9,747.80Bn, registering a surplus of UGX 326.33Bn. The gross collections grew by 19.24% when compared to gross collections last financial year. e. Direct Domestic taxes for FY 2018/19 amounted to UGX 5,551.68 Bn against a target of UGX 5,175.56 Bn leading to a Surplus of UGX 336.12 Bn and a growth of 18.01% when compared to the direct Domestic Taxes collected in FY 2017/2018. This performance was mainly attributed to good performance in Corporation Tax due to; i. Spill overs from enforcement actions in June 2017 that resulted in recovery from some taxpayers ii. Normal flow payments of provisional returns filed by some taxpayers iii. Audits of several taxpayers PAYE led to recoveries of UGX 27.42Bn. iv. The increase in the salaries of some civil servants like the medical and teaching staff by doubling their salaries at the beginning of the financial year. v. Payment of PAYE on outstanding arrears of allowances to the lecturers like leadership allowances and responsibility allowances by Makerere University vi. Streamlined budgeting, appropriation processes and the improvements in the Integrated Financial Management System (IFMS) that has enhanced the timely payment of salaries and the PAYE there on. f. Carried out advance income tax drive along the selected highway

g. Provided extension services to tax payers in HSO & contact centre. This was mainly on weekend and at night during peak filing dates h. Verified 100% of taxpayer’s data registered with a main business activity registered in each preceding month. i. During the FY 2018/19, the average filing ratios during were 75.87% for PAYE and 88.29% for VAT. The average filing gap was higher for PAYE at 9.13% in comparison to VAT which was 3.20%. ▪ To improve the quality of service, the following was done; a. Creation of self-service point in Kabale Station as a pilot study. b. Prepared and submitted status reports on refunds management through the consolidated DT quarter reports c. Prepared and submitted status reports on objections management through the consolidated DT quarter report. ▪ For arrears management, DT established new centralized arrears & enforcement unit which enhanced arrears management, (ii) Continuous monitoring & enforcing of third party agency notices, (iii) Training & equipping staff with adequate knowledge of the debt collection module and arrears reporting, and (iv) Regional arrears inspections in all regions. ▪ The risk register were updated on quarterly basis. ▪ E-tax 2 & EFD development planned activities were carried out ▪ Implemented 3 strategic trainings; in areas of treasury audits, banking sector and insurance sector. ▪ Digital Tax Stamps - contract awarded. B- Slow progress registered during FY 2018/19 o In the year 2018/19, DTD completed 142 tactical audits (Issue and Comprehensive) which was only 18% of planned. o Intelligence activities planned were; a) 2,080mIntelligence Alerts (520 cases each qtr) and b) Prime cases - 32 cases profiled for compliance actions which performed at only 19% of planned activities o 45 Public Notices about system and administrative changes (tax payer updates), 24 Public notices on Income Tax Remainders and 48 Public Notices about system and administrative changes (tax payer updates) were performed at only 22%. o Planned 105 Talk Shows ( Wholesale – 19, Manufacturing- 13, Agriculture- 15, Accommodation – 13, Real estate- 13 and Others Sectors – 32) was performed at only 47% of planned talk shows. o Only 28% of planned 330 Tax clinics/Hubs was done. o Only 35% of planned Quarterly Regional Performance Review Engagements in 05 regions (Central region, Eastern, Mid –Western, South Western and Northern Region) were performed. o Only 45% of planned 20 Station Visits to monitor Performance ( Eastern – 6, Central region -2, Mid-Western – 3, Northern – 6, South Western – 3) were carried out

o 17% of planned exercise to Monitor Processing of Taxpayers' applications (De-activation, Rejections, Approvals) and make appropriate Recommendations (e.g. Trainings, Consequence Mgt, redeployment etc.) was performed o Verifying and migrating VAT balances onto e-TAX remained pending the whole FY 2018/19 C- Recommendations − Consider increasing tactical audits that involve an in depth examination of a taxpayer’s business records and financial affairs. − The TREP initiative should be kept vibrant with motivated, well facilitated and satisfied officers whose contracts are renewed in good time and with good terms. − Ledger reconciliation tasks should be created for the end users on eTAX. − The task of VAT opening balance migration should limit and require for records within the statutory period of record keeping. − Enhance monitoring the processing of Taxpayers' applications (De-activation, Rejections, Approvals) and make appropriate recommendations (e.g. Trainings, Consequence Management, redeployment, etc.) − Increase the number and frequency of On Job trainings for staff so as to remain at par with the ever dynamic work environment − Conduct all the planned departmental work-plan review meetings so that tasks remain on course and within the budgeted resources. − Conduct all the planned tax clinics so as to bring the various categories of taxpayers into the tax compliant category and reduce the informality due to lack of information. − Provide for appropriate funding for radio talk shows regarding tax matters in the various parts of the country. − Equip the regional Information Officers (RIOs) to improve on their work methods and skills in intelligence work.

Annexes See attached with detailed analysis of departmental score cards and work plans