EFRIS: Transforming Tax Compliance in Uganda

CPA Julius Kenneth Okurut is a Member, Taxation & Economic Policy Panel – ICPAU (Photo/File)

By: CPA Julius Kenneth Okurut

Uganda’s tax administration landscape has witnessed a significant transformation with the introduction of Electronic Fiscal Receipting and Invoicing Solution (EFRIS). Spearheaded by the Uganda Revenue Authority (URA), EFRIS is a digital system designed to streamline and regulate the issuance of invoices and receipts through electronic means.

Rather than relying on traditional paper-based methods, EFRIS leverages digital technology to monitor transactions in real time, providing both efficiency and transparency to the tax system.

At its core, EFRIS facilitates the issuance of electronic invoices and receipts, ensuring prompt recording and reflection on the URA portal. This real-time interface between taxpayers and the URA allows for seamless monitoring of transactions. Each invoice or receipt is assigned a unique identifier for easy tracking.

Currently mandatory for VAT-registered taxpayers, EFRIS is expected to become crucial for tax compliance across all sectors. By fostering transparency and accountability, EFRIS aims to eliminate gaps and loopholes in tax administration and promote fair and equitable taxation.

The functionality of EFRIS revolves around three key steps:

Registration: Taxpayers with a Tax Identification Number (TIN) can register for EFRIS through the URA portal. Once registered, EFRIS becomes embedded within the taxpayer’s account, allowing for the issuance of electronic invoices and receipts.

Transaction Processing: EFRIS ensures data protection by sending a unique ‘One Time Password (OTP)’ to authenticate each transaction. Transactions can be initiated through various platforms, including Enterprise Resource Planning (ERP) systems, Point of Sale (POS) devices, and USSD codes for basic mobile phones. For most SMEs currently, the Invoicing and Receipting is done by use of the URA portal. 

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Compliance: While EFRIS is currently mandatory for Value Added Tax (VAT) registered taxpayers, there is encouragement for others to adopt electronic receipts. Failure to comply with EFRIS regulations may result in penalties. There are sanctions for every e-invoice that a VAT-registered taxpayer does not raise, they will be fined UGX 6 million irrespective of the amount on the invoice.

In the quest for widespread adoption, EFRIS extends its reach to SMEs, offering guidance and support through initiatives like the Kakasa campaign encouraging compliance by URA.

Implementation of EFRIS brings significant benefits to both taxpayers and the Taxman. It ensures improved record-keeping by providing digital transaction records, aiding businesses in maintaining accurate financial records. EFRIS enhances transparency by preventing invoice trading, ensuring transaction authenticity, and fostering transparency within the business community.

Additionally, EFRIS enables efficient tax dispute resolution through access to real-time transaction data, reducing administrative burdens for both taxpayers and URA. Moreover, e-invoices generated through EFRIS serve as legal documents, providing a secure and verifiable record of transactions.

Despite its numerous advantages, the adoption of EFRIS faces challenges such as awareness, literacy levels, and resistance from some segments of the business community mainly kikuubo traders (Uganda’s business hub). 

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In conclusion, as the system continues to evolve, collaboration between government agencies, business associations, professionals ie lawyers and accountants, umbrella bodies like KACITA, PSFU, Uganda Manufacturers Association, Bankers association, and taxpayers will be essential in realizing the full potential of EFRIS for the benefit of Uganda’s economy and society.

By fostering a culture of transparency, accountability, and education, EFRIS holds the promise of transforming Uganda’s tax landscape for generations to come. Together, let us embrace the future of tax compliance with EFRIS, ushering in a new era of prosperity and transparency for all.

CPA Julius Kenneth Okurut is a partner at HLB Jim Roberts & Executive Director Jim Roberts Consulting Ltd

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