The role of taxes in the development of Uganda’s economy cannot be overstated. Taxes avail revenue for service delivery in the health, education, security, energy, works and other critical sectors. Additionally, sufficient domestic revenue reduces dependence on external funding, which sometimes predisposes the country to unfavourable restrictions.
Yet, the Uganda Revenue Authority (URA) grapples with a low tax base owing to many unregistered businesses, non-compliance and the resultant failure to meet collection targets.
One of the major challenges affecting tax administration is poor book keeping. Many Small and Medium Enterprises (SMEs) do not keep proper books of accounts. This affects filing of returns and the generation of fair tax assessments.
While speaking on the sidelines of the 9th Forum for practising accountants (external auditors), CPA Mark Omona, the Director, Standards and Regulation at the Institute of Certified Public Accountants of Uganda (ICPAU) said that many SMEs do not keep proper books of accounts, because they have a wrong perception that professional accountants are very expensive.
CPA Omona advises SMEs to use an affordable model, where they seek the services of professional accountants on a part time basis, rather than on a full time basis. “SMEs can hire professional accountants to set them up with a tailor-made accounting system and then the accountant can perform regular reviews once or twice a month,” CPA Omona said.
He advised that the alternative is to employ accounting technicians who have studied the Accounting Technicians Diploma (ATD). “Accounting Technicians can competently perform book keeping roles, at affordable rates,” CPA Omona said.
CPA Kelemensio Busingye, the Manager, Compliance Management (Domestic Taxes) at URA, said accountants play a significant role in the tax administration process, by acting as tax agents.
Tax agents help taxpayers to fulfill their tax obligations. They act as an intermediary between URA and the taxpayer, influencing the way taxpayers choose to comply. Many taxpayers find dealing with URA directly, complex and time consuming.
As tax agents, accountants perform the following critical functions:
Tax planning: Accountants work with their clients to help them minimize tax exposure. They offer advisory to clients on the grey areas, for example issues to do with transfer pricing, Value Added Tax (VAT), and deferred tax, among others.
Investment advisory: Accountants help their clients to understand the political climate, in terms of the investment policy and tax policy to determine the impact of tax on investment decisions.
Educating tax payers: Accountants support their clients to interpret tax laws.
Compliance Support: Accountants support clients in registration, and preparation and filing of tax returns. They help with filing; of objections, request for refunds and tax certificates. They perform reconciliations and tax health checks, and attend meetings and hearings in all matters relating to a taxpayer rights, privileges or liabilities.
CPA Busingye urged more accountants to register as tax agents, as there are currently only 402 tax agents in Uganda.
CPA is the title for Certified Public Accountant. A CPA is one who is enrolled as a Full member, with the Institute of Certified Public Accountants of Uganda (ICPAU).
ICPAU is the national professional accountancy Body.