How TIN Abuse Is Costing Uganda Billions in Lost Revenue

A Taxpayer Identification Number (TIN) is a unique identifier issued to individuals and businesses for tax purposes. It is a cornerstone of effective tax administration, enabling the Uganda Revenue Authority (URA) to monitor taxpayers and enforce compliance.

However, the misuse of TINs by some taxpayers has emerged as a major avenue for tax evasion, resulting in significant revenue losses and weakening Uganda’s tax system.

This article examines what TIN abuse entails, how it occurs, its impact on the economy, and the measures in place to curb it.

Scale of the Problem

Confidential audit documents cited by The EastAfrican reveal that insider fraud and tax evasion syndicates within URA cost Uganda nearly UGX 1 trillion (about USD 480 million) over a five-year period. These losses were driven by various fraudulent practices, including schemes that likely involved the misuse of taxpayer identities or credentials.

Similarly, Business Focus reported in 2022 that individual cases linked to the fraudulent use of TINs resulted in substantial losses. In one prosecution, false invoicing carried out using a company’s TIN led to approximately UGX 9 billion in lost tax revenue.

How TIN Abuse Occurs

TIN abuse manifests in several ways, including:

Multiple TIN registrations: Some individuals and businesses fraudulently obtain more than one TIN to manipulate tax reporting, under-declare income, or shift tax liabilities between entities.

Failure to file tax returns: Certain TIN holders continue operating businesses without filing returns, making it difficult for URA to accurately assess and collect taxes due.

Impact of TIN Abuse

The consequences of TIN abuse are wide-ranging and damaging:

Loss of government revenue: Tax evasion deprives the state of funds needed to finance essential public services such as healthcare, education, and infrastructure development.

Unfair competition: Compliant businesses are disadvantaged when non-compliant entities evade taxes and undercut market prices.

Erosion of taxpayer confidence: When tax evasion goes unchecked, honest taxpayers may lose trust in the system and become discouraged from complying.

Measures to Combat TIN Abuse

To address this challenge, URA has implemented several interventions:

Stronger TIN registration controls: Enhanced verification processes, including biometric data capture and integration with the national ID system, help prevent multiple or fraudulent TIN registrations.

Public awareness and education: Sensitising taxpayers about the importance of compliance and the risks associated with TIN abuse promotes voluntary compliance.

Strict enforcement and penalties: URA has intensified audits, prosecutions, and penalties, with hefty fines and legal action serving as deterrents.

Automation and system integration: Technologies such as the Electronic Fiscal Receipting and Invoicing System (EFRIS) and Digital Tax Stamps (DTS) have improved transparency and accountability in business transactions.

TIN abuse poses a serious threat to tax compliance and economic growth in Uganda. Responsible use of TINs and adherence to tax obligations are essential for ensuring fairness and sustainable national development. While URA has made notable progress in combating this malpractice, sustained enforcement, continued adoption of technology, and ongoing taxpayer education remain critical to safeguarding the integrity of Uganda’s tax system.