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Yesterday was a major milestone for myself and @Boundless_UG. We made 4yrs, last Monday on 1 Feb, and yesterday, for the very first time, we were able to deposit PAYE and NSSF contributions for every member of the team.
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**Thread
The last time an NSSF deposit had been made on my account was April 2017, when I still working at @ACME_Uganda. For the rest of my team, this was the very first time, because they'd never held contractual jobs before.
4 years!!!!...that's how long it has taken one enterprise to get to this point!!!
Why am I sharing this though?
Well, you've probably seen that letter proposing to tax bank withdrawals; or you're still debating whether to go back and pay OTT, now that Social Media is "back".
Why am I sharing this though?
Well, you've probably seen that letter proposing to tax bank withdrawals; or you're still debating whether to go back and pay OTT, now that Social Media is "back".
It would seem that there is motivation to tax without investing in creating an environment that enables the growth of a tax base. Let me show you how.
In those 4 yrs, we've accrued tax penalties of over 8M, which our Finance people has since managed to challenge and get reduced.
In those 4 yrs, we've accrued tax penalties of over 8M, which our Finance people has since managed to challenge and get reduced.
But how did we end up with that huge tax bill?
Well...most founders build out of passion and very rarely have financial and taxation knowledge. Usually, you just know what difference you want to make in the world and how....and the rest of this other stuff is learnt on the job.
Well...most founders build out of passion and very rarely have financial and taxation knowledge. Usually, you just know what difference you want to make in the world and how....and the rest of this other stuff is learnt on the job.
To legitimize, you register and get a TIN, as part of the process to open bank accounts or raise revenues. Nobody tells you about your tax obligations at this point or about filing annual returns and whatever other statutory obligations.
And even if they do, you probably don't know how to or where to start.
Most pple start business with less than $500 so they can't meet these obligations anyway. You're also just learning the ropes of a start-up & don't have enough to feed yourself...so all of it is Rocket Science
Most pple start business with less than $500 so they can't meet these obligations anyway. You're also just learning the ropes of a start-up & don't have enough to feed yourself...so all of it is Rocket Science
Yet the Tax man doesn't stop his count. He's got your email and number, and makes sure to remind you of what's due.
That cycle, coupled with the difficulties of raising revenue – because you're a startup and Ugandan/African, can take up to 5 or even more years for some people.
That cycle, coupled with the difficulties of raising revenue – because you're a startup and Ugandan/African, can take up to 5 or even more years for some people.
In our case, it has taken 4 yrs.
Without even going the way of how our taxes are (mis)used, imagine how much it takes from small/young a business annually, if they have to remit say a monthly UGX 700,000 to URA – or get punished if/when they fail to.
Without even going the way of how our taxes are (mis)used, imagine how much it takes from small/young a business annually, if they have to remit say a monthly UGX 700,000 to URA – or get punished if/when they fail to.
Almost everyone I know runs a (side) business but there seems to be no incentive to legitimizing.
If the govt is looking for taxes, it might actually make sense to do the opposite. Give tax holidays of about 5yrs to local enterprises whose revenue is within a certain bracket.
If the govt is looking for taxes, it might actually make sense to do the opposite. Give tax holidays of about 5yrs to local enterprises whose revenue is within a certain bracket.
Also, boost entrepreneurs knowledge and capacity at entry level. Encourage them to start early.
This would allow them to grow exponentially, free from the shackles of a bad business environment, and perhaps, get to a point where they are able to pay more, and consistently
This would allow them to grow exponentially, free from the shackles of a bad business environment, and perhaps, get to a point where they are able to pay more, and consistently
Basically, we've a choice between fattening the cow first, so it attracts more on market day; or haranguing small businesses for taxes & killing them before they're able to break even.
It took us 4yrs....but how many should have, but didn't make it in that period?
Bikomye Wano!
It took us 4yrs....but how many should have, but didn't make it in that period?
Bikomye Wano!
