In a bid to boost revenue collections, Uganda Revenue Authority (URA) recently unveiled the Voluntary Disclosure Program, a tool for taxpayers to report their foreign accounts and offshore assets.
The Voluntary Disclosure Program focuses on foreign accounting information and offshore assets under the Automatic Exchange of Information (AEoI). Under this program, individuals will be required to avail information regarding their businesses outside Uganda.
Speaking at the launch, John Musinguzi, the commissioner general of URA, said as the world becomes increasingly globalized and cross- border activities become the norm, tax administrations have agreed to work together to ensure that taxpayers pay the right amount of tax to the right jurisdiction.
“The AEoI is a platform that enhances cooperation between tax authorities and brings national tax administration in line with the globalised economy. AEoI promotes transparency and deters offshore tax evasion by allowing countries to exchange financial information automatically and securely,” he stated.
David Dombo, a tax investigator at URA, stated that the world has become increasingly interconnected and this has given an opportunity to businesses a straightforward opportunity to move their financial activities around the world and an opportunity for taxpayers to easily facilitate their transactions around the world.
It has, however, given an opportunity to some traders or clients to be able to hide their assets across the world. This denies Uganda the opportunity of increased revenue that can facilitate public service delivery, hence creating a dent in the tax system of Uganda.
He said several countries have since come together under the global forum to set up some international tax standards, which include automatic exchange of information and the exchange of information on request. The exchange of information on the request is when a country requests information on financial accounts and assets at a bilateral level and uses it for tax purposes.
“The automatic exchange of information was an initiative that was agreed as an international standard and it started with the countries under the Organisation for Economic Cooperation and Development where countries agreed and have a consensus on automatic exchange of financial information for tax purposes on a reciprocal basis,” he stated.
Uganda exchanges information with another jurisdiction, which is a pattern of a member of the OECD global forum. Financial institutions under the convention will be required to provide this information to the competent authorities and for Uganda, it is URA, and this information will be automatically exchanged with the other jurisdictions on resident taxpayers holding assets in foreign jurisdictions.
The information that ought to be exchanged includes; financial account information held in banks, insurers and investment entities, account holders, beneficial ownership, transactions that have occurred throughout the period, incomes, dividends and others.
Since joining the global forum, Uganda made 265 requests and more than Shs 200 billion has been collected in revenue from that external information. In 2021, Uganda committed to implementing the automatic exchange of information standard and come September 2025, the country will be receiving the information automatically.
“Once Uganda implements the Automatic Exchange of Information, it will join a network of over 120 countries that will be receiving information regarding taxpayers who hold assets in foreign jurisdictions,” Dombo said.
He said the exchange of information will start with the financial institutions that are required under the newly- enacted law to provide information and do due diligence on all accounts by identifying non-resident accounts.
In December 2024, financial institutions will be required to forward the information to the tax body and in September 2025, information shall be received automatically by URA for review of tax matters.