KAMPALA — The Uganda Revenue Authority (URA) is stepping up efforts to bring small and informal businesses into the formal tax system as part of a broader strategy to boost domestic revenue collection and reduce dependence on foreign aid.
A key aspect of this initiative is the compulsory use of the Electronic Fiscal Receipting and Invoicing System (EFRIS), which allows URA to monitor business transactions in real time. This digital system is designed to enhance transparency, reduce revenue leakage, and improve overall tax compliance.
Commissioner General John Musinguzi, in a recent media address, reiterated that all businesses, including small-scale and informal operators, are expected to adopt the new digital systems. “EFRIS provides accurate, real-time transaction data, making it easier to expand the tax base and improve compliance,” he said.
EFRIS requires businesses to issue digital invoices and receipts that are automatically transmitted to URA’s servers, helping close long-standing gaps in revenue reporting.
In addition to EFRIS, URA is working with Global Voices Group (GVG), a tech firm that provides systems to independently verify taxpayer data. This partnership, active since 2021, allows URA to reduce its reliance on self-declared income figures, a common source of tax evasion.
The revenue authority is also pushing for more businesses to acquire Taxpayer Identification Numbers (TINs), register for Value Added Tax (VAT) where applicable, and meet monthly Pay As You Earn (PAYE) obligations for their workers.
The initiative is part of URA’s drive to meet its revenue target of over Shs 29 trillion in the 2024/2025 fiscal year. Officials view the small and medium-sized enterprise (SME) sector—long considered under-taxed—as essential to achieving this goal.
“Digitally compliant SMEs are becoming increasingly important in our domestic revenue efforts,” said a senior URA official. “Their integration helps ensure a more equitable distribution of the tax burden.”
Although some SME owners have voiced concerns over the initial costs and technical requirements of compliance, URA argues that the long-term benefits—such as formalization, better financial records, and improved access to financing—far outweigh the short-term challenges.
To ease the transition, URA is conducting widespread taxpayer education programs aimed at guiding businesses through the integration process.
Bringing SMEs into the tax fold forms a crucial part of URA’s broader reforms, which are focused on enhancing domestic resource mobilization to support national development priorities.