Uganda needs a tax ombudsman for fairer, more efficient tax administration

By: Mutumba Mark

Globally, it is recognized that the establishment of tax ombudsman or “office of tax ombudsman” holds the potential to address the complexities of a country’s tax systems, address the complaints against the tax administration, ensure that the rights of taxpayers are respected and that the services of the tax administration are provided in an equitable and

efficient manner.

The tax ombudsman office also ensures that government (through an independent office) is at the forefront of facilitating the resolution of controversies between the tax administration and taxpayers improving the overall tax system.

In most low-income countries such as Uganda, tax is regarded as the most sustainable tool for financing national development. However, a crucial gap exists between the

principles/standards outlined in the Uganda Revenue Authority's  client service charter and the reality faced by taxpayers. This is where the establishment of a tax ombudsman office becomes a critical step towards a more equitable and efficient tax administration system.

Whereas URA’s client service charter promises prompt refunds, swift processing of exemptions, and courteous treatment for taxpayers, the ongoing stand-off between traders

and URA over the Electronic Fiscal Receipting and Invoicing System (EFRIS) implementation highlights the disconnect.

EFRIS is portrayed as a streamlined system solely benefiting businesses and aiding tax collection. However, based -on concerns raised by the business community, there is need to review and reshape the objectives of the EFRIS system to speak to the realities of the ordinary business owner to boost confidence and adoption of EFRIS among the masses.

More still, the EFRIS enforcement methods have come under public scrutiny especially the excessive force and coercion used in enforcing compliance. For instance, the hefty daily

penalties (shs6 million) with a three-day payment requirement imposed on traders stood contrary to legal provisions which require the penalties to be monthly under the Tax Procedures Code Act.

The compelled issuance of invoices prior to making deliveries undermines the spirit of the tax law envisioned under S14(1)(c) (time of supply) of the Value  Added Tax Act. These should cause concern and utmost consideration by the tax authority.

This non responsiveness and delays in response on the issues and concerns of the taxpayer rights and complaints not only creates confusion but also fosters resentment.

URA has tried to create avenues of addressing service-related complaints of the taxpayers through issuing the Client Service Charter, increasing dialogue with taxpayers, taxpayer

education and awareness and tried to change the face of tax administration.

However, delays plague other areas of URA service delivery, such as audits routinely exceeding the stipulated six-month limit (as seen in East Africa Cranes Limited v URA TAT No 51 of 2018), requests for irrelevant documentation for audit purposes, and multiple audits for the same tax period create additional administrative burdens for taxpayers.

Delayed response on tax advisory often taking months to arrive, have hindered informed business decision making affecting the investment potential in the country.

These service delivery problems cannot be addressed by the by the courts of justice as they fall outside the realm of legal disputes and pertain to URA's internal procedures. This lack of a proper recourse mechanism can push desperate taxpayers towards unsavoury options to expedite service, potentially breeding a culture of corruption and influence peddling.

While URA has an internal complaint system, it lacks the necessary independence to effectively address these issues.

Over the years, the Tax Justice Alliance Uganda has advocated for the creation of a tax ombudsman office in line with the Domestic Revenue Mobilization Strategy for FY 2019/20-

2023/24.

Drawing inspiration from international practices and successful models’ countries like Kenya, Tanzania, National Taxpayer Advocate (US) Adjudicator (UK), South Africa (Tax

Ombud), and Tanzania (Tax Ombudsman Service).

In the year 2019/17, the ombudsman in Kenya handled a total of 92,994 cases out of which 77,536 were resolved boosting taxpayer confidence.

Therefore, If established in Uganda, this would provide a vital platform for taxpayers to report service-related issues such as delays, mistakes, and unfair treatment by

URA officials boosting tax payer morale and changing tax payer perception towards the tax authority.

Absence of the ombudsman office in Uganda has contributed to various challenges that have escalated and drawn attention of the President of Uganda. For example, where URA

demands payment of a penalty within three days instead of the statutory 28 days, the traders would complain to the Ombudsman. A business owner facing an overly lengthy audit can file a complaint with the Tax Ombudsman, who then intervenes to ensure a timely resolution within the legal timeframe.

Taxpayers seeking guidance from URA would not have to wait months for clarification on tax implications. With this office, traders' complaints would be listened to and addressed through a proper channel and the same would be resolved amicably.

By creating a tax ombudsman office, Uganda can build a more transparent, accountable, and taxpayer-friendly tax administration system. This win-win for both the government and

taxpayers will lead to a more robust and efficient tax collection process, ultimately fuelling Uganda's national development aspirations.

The fact that a fair and efficient tax system benefits everyone cannot be over-emphasized.

When taxpayers experience quality service from the tax authority, it fosters a culture of voluntary compliance and disclosure. This translates to increased tax revenue for the

government, which can be used to improve public services and infrastructure.

The author is a  tax /trade policy analyst at SEATINI – Uganda