Value Added Tax And Its Contribution To Domestic Revenue A Case Study Of Uganda Revenue Authority

ABSTRACT

The purpose of this study was to investigate the degree of contribution of VALUE

ADDED TAX (VAT) on the domestic revenues collected by the Uganda Revenue Authority.

The research was inspired by the view that the researcher having read a series of literature on

Value Added Tax followed by theories on the enormous contributions anticipated initially

from VAT. Studies by some authors revealed that VAT had led to substantive contributions

to total domestic collections in other countries like Kenya, South Africa, and Nigeria among

others and same was and is hoped to add amounts needed to develop the economy and avoid

debts leading to own dependence.

This, therefore, made the researcher to design research questions of the study basing on the

above foundation to prove whether or not VAT comes in handy with benefits and find

reasons why it still performs dismally. The instruments used in data collection were mostly

records got from previous reports of URA, guides from URA officials and internet.

The trend of revenue performance showed that introduction of VAT led to a tremendous

increase in domestic revenue by 9.98% per year as compared to 2.54% before it was

introduced. This therefore meant that there was a significant contribution by VAT to the

countries domestic revenue, VAT also had appositive influence on gross domestic product of

about 20,000-40000 which almost doubled the revenue (10,000-20,000) for before existence

of this tax confirming appositive initiative taken by govermnent to introduce VAT.

Following all the findings and interpretations made thereon, the researcher had to come out

with among others; Government should undertake more simplifications of the VAT

approaches, the MFPED should carry out more technical reviews on the VAT on sale of

residential properties and tax investment incentives for international companies, the tax body

should investigate and register all VAT taxpayers above the gazette threshold, taking care to

identifying those taxpayers who are splitting their turnover with an intention of evading the VAT process.