Actionable Tax Compliance in Uganda: Lessons from Other Countries

Actionable Tax Compliance in Uganda: Lessons from Other Countries

With the advent of the COVID-19 pandemic in 2019/20, Uganda experienced an erosion of tax collection, reflecting the decline in economic activities and possible deterioration in tax compliance. Indeed, following the outbreak, the country’s revenue underperformed with revenue shortfalls of UGX 3,593 billion, UGX 2,376 billion and UGX 706 billion during the 2019/20, 2020/21 and 2021/22 financial years (FY), respectively. Throughout these periods, most of this under-performance was mainly concentrated within domestic taxes especially income taxes, where tax liability is determined through self-assessment.

Moreover, Uganda has persistently lagged behind its regional neighbours regarding tax revenue mobilization. A comparison with other countries shows that Uganda’s tax revenue to GDP, currently at 12.2 percent is still below the Sub-Saharan Africa average of approximately 18.5 percent. In addition, Uganda lags behind her East Africa Community neighbours, such as Kenya (15.1 percent) and Rwanda (14.6 percent), in 2018/19.2 The situation underscores the importance of improvement in tax administrative measures, given the critical need to generate fiscal resources for addressing socio-economic development needs and safeguarding debt sustainability through enhancing revenue mobilization.

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• Published Jun 12, 2023