What Can We Learn From the Uganda Revenue Authorityys Approach to Taxing High Net Worth Individuals?

Kangave, Jalia; Nakato, Suzan; Waiswa, Ronald; Nalukwago, Milly Isingoma; Zzimbe, Patrick Lumala

doi:10.2139/ssrn.3120579

Cited by 17 publications

(34 citation statements)

References 8 publications

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“…While political positions on corruption are often, understandably, morally black and white, the most operationally useful new research is often more nuanced and avoids moral judgment. Understanding and shifting incentives and easing people toward noncorrupt behavior is showing more promise in research in knotty areas such as reducing corruption in the massive skills training investments in Bangladesh (Khan, ) and in getting the rich to pay more tax in Uganda (Kangave, Nakato, Waiswa, Nalukwagu, & Lumala Zzimbe, ). If we—as scholars—self‐censor our findings in research on corruption, we risk losing important insights such as these and, perhaps, even delegitimizing the field.…”

Section: No We Do Not Say That Corruption Is a “Good Thing”mentioning

confidence: 99%

Thinking politically about corruption as problem‐solving: A reply to Persson, Rothstein, and Teorell

Marquette

Peiffer

2019

Governance

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Section: No We Do Not Say That Corruption Is a “Good Thing”mentioning

confidence: 99%

Thinking politically about corruption as problem‐solving: A reply to Persson, Rothstein, and Teorell

Marquette

Peiffer

2019

Governance

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“…• Non-compliance by elite high net worth individuals (HNWIs), who invest in foreign tax havens and benefit from political capital and connections in evading taxes (Kangave et al 2016). The 2017 Paradise Papers reveal how a prominent Ugandan politician had significant offshore investments in a tax haven (AlJazeera 2017).…”

Section: Introductionmentioning

confidence: 99%

“…• Professionals, such as lawyers, doctors, architects, surveyors, with significant earnings, some of whom may be categorised as HNWIs (UBOS 2018; Kangave et al 2016). A 2019 study of income tax evasion in Uganda estimates that 62 per cent of professionals are involved in evasion and avoidance (Lakuma 2019).…”

Section: Introductionmentioning

confidence: 99%

Tax Amnesties in Africa: An Analysis of the Voluntary Disclosure Programme in Uganda

Rukundo¹

2020

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Tax amnesties have taken centre stage as a compliance tool in recent years. The OECD estimates that since 2009 tax amnesties in 40 jurisdictions have resulted in the collection of an additional €102 billion in tax revenue. A number of African countries have introduced tax amnesties in the last decade, including Nigeria, Namibia, South Africa and Tanzania. Despite their global popularity, the efficacy of tax amnesties as a tax compliance tool remains in doubt. The revenue is often below expectations, and it probably could have been raised through effective use of regular enforcement measures. It is also argued that tax amnesties might incentivise non-compliance – taxpayers may engage in non-compliance in the hope of benefiting from an amnesty. This paper examines the administration of tax amnesties in various jurisdictions around the world, including the United States, Australia, Canada, Kenya and South Africa. The paper makes a cost-benefit analysis of these and other tax amnesties – and from this analysis develops a model tax amnesty, whose features maximise the benefits of a tax amnesty while minimising the potential costs. The model tax amnesty: (1) is permanent, (2) is available only to taxpayers who make a voluntary disclosure, (3) relieves taxpayers of penalties, interest and the risk of prosecution, but treats intentional and unintentional non-compliance differently, (4) has clear reporting requirements for taxpayers, and (5) is communicated clearly to attract non-compliant taxpayers without appearing unfair to the compliant ones. The paper then focuses on the Ugandan tax amnesty introduced in July 2019 – a Voluntary Disclosure Programme (VDP). As at 7 November 2020, this initiative had raised USh16.8 billion (US$6.2 million) against a projection of USh45 billion (US$16.6 million). The paper examines the legal regime and administration of this VDP, scoring it against the model tax amnesty. It notes that, while the Ugandan VDP partially matches up to the model tax amnesty, because it is permanent, restricted to taxpayers who make voluntary disclosure and relieves penalties and interest only, it still falls short due to a number of limitations. These include: (1) communication of the administration of the VDP through a public notice, instead of a practice note that is binding on the tax authority; (2) uncertainty regarding situations where a VDP application is made while the tax authority has been doing a secret investigation into the taxpayer’s affairs; (3) the absence of differentiated treatment between taxpayers involved in intentional non-compliance, and those whose non-compliance may be unintentional; (4) lack of clarity on how the VDP protects the taxpayer when non-compliance involves the breach of other non-tax statutes, such as those governing financial regulation; (5)absence of clear timelines in the administration of the VDP, which creates uncertainty;(6)failure to cater for voluntary disclosures with minor errors; (7) lack of clarity on VDP applications that result in a refund position for the applicant; and (8) lack of clarity on how often a VDP application can be made. The paper offers recommendations on how the Ugandan VDP can be aligned to match the model tax amnesty, in order to gain the most from this compliance tool.

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“…Creative approaches can provide useful supplementary, albeit non-definitive, information, where the collection, curation and dissemination of data is weak -for example, tax authorities can supplement the limited data available with readily observable criteria. The Uganda Revenue Authority has been successful in using lifestyle indicators to identify, and generate a database of, high net worth individuals (Kangave et al 2018). The value of taxpayers' bank deposits, motor vehicles that they purchase, loans that they can secure for personal use (mortgages) and investment in their firms, have all been successfully utilised in Uganda to identify high net worth individuals who either do not file their returns or underreport their income.…”

mentioning

confidence: 99%

“…The value of taxpayers' bank deposits, motor vehicles that they purchase, loans that they can secure for personal use (mortgages) and investment in their firms, have all been successfully utilised in Uganda to identify high net worth individuals who either do not file their returns or underreport their income. Although the publicly available information in newspaper, magazines and social media regarding the lifestyles of professionals cannot be used as conclusive proof of their wealth and income, such knowledge can be used to triangulate more reliable information or prod the taxpayer to produce evidence of their actual income (Kangave et al 2018).…”

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confidence: 99%

Taxation of Self-Employed Professionals in Africa: Three Lessons from a Kenyan Case Study

Ogembo

2020

SSRN Journal

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We currently know very little about the taxation of professionals in Africa-scholarly work on this group of taxpayers is scant. The little research that does exist is located within the literature on the taxation of the 'hard-to-tax', a term in tax evasion literature that refers to farmers, small and medium-sized enterprises, and professionals. However, scholarly discourse on the hard-to-tax in low-and middle-income countries, particularly in Africa, has focused primarily on farmers and small and medium-sized enterprises. Professionals are rarely critically considered, despite the acknowledgement in the literature that, considering their potential earnings, the absolute amount involved in evasion by professionals in low-and middle-income countries is probably higher than farmers and small and medium-sized enterprises. This paper begins from the premise that it is sensible to begin to focus more seriously on self-employed professionals in the policy and administrative efforts aimed at increasing tax collection from the informal sector in Africa. Proceeding on that premise, the author provides three lessons that we can learn from a Kenyan case study on taxing selfemployed professionals in Africa.

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What Can We Learn From the Uganda Revenue Authorityys Approach to Taxing High Net Worth Individuals?

Cited by 17 publications

References 8 publications

Thinking politically about corruption as problem‐solving: A reply to Persson, Rothstein, and Teorell

Thinking politically about corruption as problem‐solving: A reply to Persson, Rothstein, and Teorell

Tax Amnesties in Africa: An Analysis of the Voluntary Disclosure Programme in Uganda

Taxation of Self-Employed Professionals in Africa: Three Lessons from a Kenyan Case Study

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