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XINHUA NEWS SERVICE REPORTS FROM THE AFRICAN CONTINENT

 
Tax bodies in East Africa record shortfalls in revenue collections

By KABONA ESIARA KIGALI Rwanda (Xinhua) -- Regional tax bodies have registered shortfalls in revenue collections in the first four months of the 2016/17 financial year, with top Ugandan, Kenyan and Tanzanian revenue officials fearing huge tax gaps.

During a recent meeting for tax administrators in Kigali, the Rwanda Revenue Authority (RRA) said it had missed its tax revenue target by four per cent. It also missed its non-tax revenue target. RRA’s tax revenue target was Rwf333.4 billion ($153 million), but only Rwf323.3 billion ($148.7 million) was collected between July and October.

According to Richard Tusabe, RRA’s Commissioner-General the shortfall in revenues was as a result of fraud perpetuated using false invoices to claim VAT.

For the Kenya Revenue Authority (KRA), the target was to collect Ksh435,424 million ($4.2 million), but only Ksh420,707 million ($4 million) was realised.

While taxes from petroleum raked in Kshs45,517 million ($446 million), which is above the targeted Ksh37,609 million ($368.8 million), low collections from international trade revenue, domestic revenue, fees and licences hindered KRA from meeting its target.

KRA faces a challenge of under declaration of import values at the Mombasa Port leading to loss of millions of dollars in taxes. Also some goods declared to be in transit sometimes end up in the local market.

KRA commissioner-general John Njirani is pushing for a regional initiatives to improve tax compliance.

Tanzania is also grappling with low tax revenues. Data from the Tanzania Revenue Authority (TRA) show that the tax body was expecting at least Tsh4.7 trillion ($2 billion) but only collected Tsh4.6 million ($2,080).

“We have witnessed a significant decline in import trade passing through our port. Imports for the Tanzania domestic market declined by 10 per cent. In the region imports for Democratic Republic of Congo declined by 18 per cent; in Zambia by 19 per cent; in Burundi by 21 per cent and in Uganda by nine per cent,” said Mary M Ngelela, director of planning and research at TRA.

The Uganda Revenue Authority (URA) is equally struggling to meet its revenue collection targets. The country was hoping to collect Ush3,890.29 billion ($1.07 billion) but only collected Ush3,723.67 billion ($1 billion) between July and October.

Dickson Katushumbwa Commissioner of Customs at URA attributes the falling import revenues in the region to increasing consumption of locally-manufactured goods as they have become cheaper with the depreciation of the local currencies.

The low global commodity prices have also reduced tax collections. For instance, steel prices which were at $1,000 per tonne have dipped to $300-$350 per tonne.

Wheat has also been hit hard by the depressed global prices. The prices of wheat have fallen from highs of $650 per tonne to $400 per tonne.

For South Sudan, tax revenues have remained small with revenue contributions stagnating at four per cent of GDP.

The tax revenues have dropped from $80 million in the 2012/13 fiscal year to $50 million in 2015/2016 fiscal year following the civil war and decline in oil price.

“Each shock has reduced our national income (the amount of money produced in the country). But government expenditure has not fallen by the same amount. We have financed expenditure by running down our reserves and borrowing — primarily from the Bank of South Sudan. This has created annual inflation of 730 per cent, and meant the Southern Sudan Pound has lost 80 per cent of its market value in the past year,” said Albino Chol Thiik South Sudan’s Director-General of taxation at the Ministry of Finance and Economic Planning.

“Without reforms, South Sudan’s economy will not recover sufficiently to allow the government to provide salaries and services,” he added.

The region’s tax revenues have also been affected by a steady increase in duty-free goods from regional economic blocs.

           

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