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The Uganda Revenue Authority (URA) has set up a mobile tax hub at Kikuubo, downtown Kampala, in a move aimed at bringing services closer to taxpayers and convincing the traders to formalize their businesses. 

According to the acting assistant commissioner for public and corporate affairs, Ian Rumanyika, the tax hub will last 15 days, engaging in door-to-door sensitization of traders, and registering new businesses for tax purposes. 

“Our officials are also equipping the traders with knowledge about their rights and obligations as taxpayers, as well as giving free tax advisory and hands-on support services on any tax-related challenges,” he said.

 He said the exercise is part of the Tax Payer Registration Expansion Program (TREP), which is being conducted with the Uganda Registration Services Bureau (URSB) and the Kampala Capital City Authority (KCCA).

 Rumanyika said the taxman has adopted a listening approach to the concerns of the public, and the business communities and is responding to their needs to enhance service delivery. 

He said formalization of the small and medium-sized enterprises (SMEs) is a good thing for the enterprises because it would also allow them to access none bank capital, such as private equity. 

He said informality is limiting firms from accessing equity capital, through private equity placements and selling shares on the stock market, leaving debt finance as the only available option.   

“The maturity of debt finance is often much shorter than the payback period of capital investments, meaning that SMEs have to devote a large share of their revenues to servicing their debt which often leads to the failure of the firm,” he said.

 According to the Uganda Bureau of Statistics (UBoS), the informal sector has grown over the last five years, crossing from 45% to approximately 51%.  

Rumanyika said the widespread informality is now contributing broadly to the underperformance of domestic revenue, which generally impedes the growth of the fiscal space.  

He said the informal sector remains largely hidden from existing regulations and yet it is highly commercial, with a great potential to turn around the country’s revenue fortunes.

Original story by Edward Kayiwa @ Newvision

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