Pre-Bid Meeting Hotel Africana, Kampala

1. Pre-Bid MeetingHotel Africana, Kampala The requirement for an ITAS 5th February 2007 Developing Uganda Together

2. Important Note: The contents of this presentation do not form a part of the RFP/Bid Documents. Developing Uganda Together

3. This presentation… • About URA • Key functions of DT; the business need • The IT Environment & Other needs Developing Uganda Together

4. About URA • Quasi autonomous • Over 60 branches countrywide (33 for DT), 80%+ revenue from Kampala • Underwent a major restructuring exercise in 2004 • we have continued the reform and modernization of the organization • Extends from modernizing the operating departments to enhancing integrity and HR reforms • Key related projects: URAnet, Data Warehousing, NTR Modernisation Developing Uganda Together

5. Domestic Taxes • Driving this procurement; the Domestic Taxes Modernization Project (DTMP) Developing Uganda Together

6. Project Management Structure Developing Uganda Together

7. Single numeric identifier, recognition of tax type through use of tax accounts Extensive validation of applicants before issuance of TIN, both by officers and system Active management of the register – system prompts for deregistration based on criteria System prompts for statutory registrations Decentralized registration, but communication between offices poor Low literacy & compliance levels Large informal sector No national ID Multiple identifiers & duplications TIN not used by DT Little or no deregistration Identifying Our Clients • Online registration? At least online application • Incorporate National ID when it’s ready • Centralized registration process Developing Uganda Together

8. Direct filing and payments at bank – related weaknesses Unreliable record of FoF, related weaknesses in compliance management Multiple return filing dates (income tax) Self Assessment for all taxes except individual income taxes Taxpayers restricted to office of registration Returns submitted at any office Record of FoF on system Key dates/FoF trigger compliance actions All calculations by system, officer confirmation of notices Key information on returns captured into system Data capture shifted to clients where possible System validation of key numeric declarations Returns and Assessments • System prompts for imposition of penalties • Automatic updates of client profile and accounts • Returns not submitted at banks • What alternatives for e-filing? • Revision of tax procedures – through creation of common Tax Procedures Code • Manual calculation – labor intensive, prone to errors • Penalties & Interest not imposed consistently • Over reliance on estimates - huge stock of accumulated arrears • Ambiguity between “estimated”, “additional”, “amended”, “vacated” assessments. Developing Uganda Together

9. No cash received at offices, but… Bank processing Payments received through banks against BPAF issued by URA Manual “till sheets” submitted to local URA office Taxpayer Accounts maintained in paper records, resultant problems Manual computations, labor intensive No trust in our paper records No “Double entry” accounting Double entry accounts maintained on system, all calculations done by system No complicated receipts, replaced by periodic statements of account Significant labour force gains Proposal needed for order of crediting payments Payments and Taxpayer Accounting Developing Uganda Together

10. Under LTO and FD Most services are restricted to office of registration No uniformity – application of procedures differs at different offices Front office lacks adequate information to deliver services Many services are deferred to the back office Extensive information support to the front office Must conclude as many services as possible All communication logged and acknowledged Time sensitive back office activities triggered Services availed online Returns and notices pre-printed with demographic information Service Delivery Developing Uganda Together

11. Decentralized registries Manual document registers are maintained Over reliance on paper records Communication difficulties result in No alerts on time-bound mail Compliance officers may not be aware that [other] compliance actions have taken place, or that taxpayers have responded Reference documents difficult to access Much less need to resort to manual records Document identification & location (for individual documents) by system Record of access to documents Online requisition and access control Mail and Document Management Developing Uganda Together

12. Decentralised management of audits Audit selection hampered by lack of information Management of audits is difficult No audit trail Level of completion is ambiguous Actions to be taken not standardized Impact of audits on compliance is difficult to assess Administration is decentralized, but guidelines, selectivity criteria managed centrally, adjustable Case selection is by system, based on input criteria. Online tracking and management of cases System prompts for standard actions Officers record key actions taken/decisions made on the system Audit & Investigations • Uneven skills distribution • Investigations managed outside DT • Process flow and rules of escalation are ambiguous • Investigation results not reflected in client profile and account • Case allocation to officers is system supported, handled online • Escalation to investigation recorded online, investigation actions, decisions and results recorded on system • Changes in organization and staffing levels – a more flexible approach to support demands at different geographical locations Developing Uganda Together

13. Taxpayers allowed too much slack – enforcement instruments not applied effectively Evidence trails are weak, records not reliable Debt collection process in two departments, deficiencies have been noted System prompts for collection actions Cases managed and tracked online Build up of evidence escalating to court action System prompts for standard actions Online case allocation Online recording of actions taken All actions taken are recorded on system Debt collection and enforcement Developing Uganda Together

14. Managed by CS department – Finance Division, Sun Financials Only summary accounts are maintained Sent by the individual offices Reconciled against funds transferred to BOU by commercial banks. Reconciliation of revenue accounts and taxpayer accounts is not done – taxpayer accounts not accurate Taxpayer accounts should be accurate enough to allow accurate tax accounting May consider consolidating other tax accounts as well (customs) Revenue Accounting Developing Uganda Together

15. Management of tax related complaints is decentralized Interpretation of laws and procedures is not uniform Monitoring maturity of cases is difficult, based on paper records and results in legal battles and loss of revenue. Escalation to TAT, courts of law not clearly reflected in taxpayer records, case results not disseminated evenly Case allocation to officers is system supported, handled online System prompts for standard actions, particularly the time-bound actions Officers actions recorded on system Online access to rulings, and other reference materials Complaints and Appeals Developing Uganda Together

16. Not a basis for decision making Data coverage is low – not the whole transaction is captured lack of the big picture No electronic data on some tax types at all Data take on strategy and procedures Data capture procedures – for the extensive data in manual records Future decision making based on data analysis Data Management Developing Uganda Together

17. Headquarters Vs. Operations Many operational man hours spent in report writing Operational guidelines/instructions communicated on paper Support HQ with necessary information for decision making Management reports generated off system, no direct intervention by operational staff Operational guidelines and instructions prepared and communicated through the system Management & Management Reporting Developing Uganda Together

18. Security and Audit Trails • User rights management, password access to system functions • Audit trail of actions maintained, officer may not overwrite other officer’s work • All accessing of taxpayer records is monitored • Internal Affairs prompted (automatically) to examine certain actions based on pre-defined criteria Developing Uganda Together

19. Low computer literacy >60% have comprehensive tax administration training Still a significant divide between direct and indirect tax officers Significant change resistance issues URA initiated basic IT training Proposed changes in training curricula and procedures (tax administration related) Supplier Project Management Strategy should include a change management plan! Human Resource Developing Uganda Together

20. Current IT Environment • WAN • connects 24 Local Area Networks • Leased lines • Speeds typically 128, 64 and 32kbps depending on number of users Developing Uganda Together

21. Current IT Environment - Platforms • Desktop environment • managed using MS Active Directory • PCs have Windows XP SP2 OS. • Anti-virus : F-Secure Enterprises v6.6 • Server OS • Microsoft Server 2003 • Suse Linux Enterprise Server • Database platforms • Oracle • MS SQL server • Office Automation • MS Office product suit - OSL Developing Uganda Together

22. Current Environment – Business Systems • Customs • ASYCUDA++ • Oracle on Suse Linux • Financials & Human Resource • SUN Accounts • SQL Server • EHorizon • Fleet Management Developing Uganda Together

23. Current Environment – Business Systems • DT • VENUS • Used for reference purposes • Introduction of offsets caused its demise • Bespoke Systems • Cover a limited part of DT business • Operate Centrally • Automated Manual Processes • Revolve around the bank payment Advice form • Client Server Win Apps with SQL Server backend Developing Uganda Together

24. URANet Project • Refurbished Ultra modern data center • Server Consolidation • Setup/Upgrade of 58 stations • Integration of voice & Data - VOIP • Outsource all WAN Links • Storage Area Network Developing Uganda Together

25. Concept of Operation • Centralized operation is preferred • Network failures should not halt local operations • Local Services must always be available Developing Uganda Together

26. Developing Uganda Together