URA waives EFRIS penalties to support business compliance

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URA waives EFRIS penalties to support business compliance
URA chief John Musinguzi Rujoki

The Uganda Revenue Authority (URA) has waived penalties related to the electronic fiscal receipting and invoicing solution (EFRIS).

This system, designed to ensure all business transactions are recorded and reported electronically to the tax authority, faced significant backlash from traders.

The decision to waive penalties follows an April 2024 directive from President Yoweri Museveni, who responded to traders' protests citing high costs and operational difficulties with EFRIS.

During a meeting with traders at the URA headquarters in Kampala, URA Commissioner General John Musinguzi acknowledged the premature penalties.

"We are using technology to mobilize revenue, but adopting to the new change was harsh and challenging for taxpayers. We rushed to penalize them before they understood the EFRIS technology. The penalty was issued without sufficient knowledge; therefore, we did it in error," Musinguzi admitted.

Musinguzi expressed optimism that the penalty waiver would facilitate easier filing of returns and better compliance with EFRIS requirements in the future.

Traders welcomed the waiver but voiced concerns over the 18% value-added tax (VAT) and the Shs 150 million threshold for compliance.

"URA should increase the threshold amount from Shs 150 million to at least one billion," said Edward Ntale, Chairperson of the United Arcaders and Traders Entrepreneurs Association (UATEA).

"Small businesses with low sales and profits need relief. Selling Shs 410,000 every day might leave you with less than Shs 10,000 in profits."

Ntale also criticized the 18% VAT as unfair to micro, small, and medium enterprises (MSMEs).

"The current VAT rate is not just for MSMEs, who struggle with low margins," he added.

In recognition of their efforts to adapt to the EFRIS system, URA awarded certificates to penalty waiver beneficiaries, encouraging them to continue their compliance journey.

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