On 16 April 2021 the OECD issued a tax and development case study entitled Strengthening tax transparency to combat tax evasion, illicit financial flows and profit shifting in Uganda. The case study looks at how international and development partners have successfully worked together to strengthen tax transparency and combat base erosion and profit shifting (BEPS) in Uganda.
Exchange of Information
The Exchange of Information (EOI) office within the Uganda Revenue Authority (URA) deals with all matters relating to the exchange of information on request (EOIR), spontaneous information exchange and mutual agreement procedures. It has developed a five-year EOI strategy that is aligned with the URA’s organisational plan. In 2018, ATAF and the Global Forum supported Uganda in drawing up a practical timeline for implementing the standard on automatic exchange of financial account information (AEOI). In February 2021 Uganda set a deadline of 2023 for implementing the AEOI standard. The Global Forum has been providing remote support for the implementation of the enhanced EOIR standard, including beneficial ownership information.
Transfer Pricing
In Africa the taxation of MNEs is an important part of domestic resource mobilisation. Tax transparency helps to combat BEPS by allowing tax administrations access to key data for transfer pricing risk assessment and audits. Uganda has been losing millions of dollars in tax because of aggressive transfer pricing by multinationals and the abuse of tax treaties. With support from international organisations and from the African Tax Administration Forum (ATAF), which contributed knowledge of the specific challenges faced in Africa, Uganda reviewed its transfer pricing and interest deductibility rules. New transfer pricing penalties were introduced 2017 and in 2018 interest deductibility legislation was introduced in line with BEPS Action 4. The changes have led to the collection of additional tax of around USD 125 million over the past five years.
Revenue statistics
Since 2017, the OECD, ATAF and the African Union Commission have been working with URA tax experts and statisticians to put together harmonised statistical data on tax and non-tax revenues in line with the international standards. The information is included in the publication Revenue Statistics in Africa. Uganda has been collecting comprehensive revenue data and improving its methodology for analysing tax and non-tax revenue indicators. Revenue statistics are important in determining tax policy, by monitoring corporation tax collection and measuring the progress made on BEPS issues.
Lessons Learned
A strategic, cross-governmental approach, and engagement with international and regional stakeholders, can lead to improvements in tax transparency. The introduction of good practice in the tax administration has been helped by the experience and lessons gained through participation in the Global Forum Peer Review Group and participating in the review of other jurisdictions. If technical assistance programmes include transfer of knowledge mechanisms within the country and beyond, this can lead to a sustainable build-up of skills.
The international exchange of information combined with measures to combat BEPS can help protect the tax base; and expert technical assistance in transfer pricing and related issues can help the tax administration to improve domestic resource mobilisation. Many developing countries will require technical assistance over a number of years to achieve sustained success in tackling tax avoidance and tax evasion.
