KAMPALA, October 12, 2025 — The Directorate of Economic Affairs under the Ministry of Finance, Planning and Economic Development [MOFPED] has released a critical report on the country’s economic lifeline its domestic revenue performance.
The government had set ambitious targets to be achieved by the Uganda Revenue Authority [URA] in the 2023/2024 financial year [FY]: A projected net revenue of Shs 29.67 trillion, with tax revenues expected to deliver Shs 27.42 trillion and non-tax revenues [NTR] adding Shs 2.25trn. This goal represented a bold 13.83 percent increase over the Shs 25.57trn collected in the previous financial year.
However, according to the report, the road to that target proved challenging. The actual collections fell short by Shs 1.89trn, with Shs 27.78trn collected by year-end. Yet, within this shortfall lay a silver lining, revenues had still grown by 8.66 percent, equivalent to Shs 2.21trn, marking progress, albeit slower than the four-year average growth rate of 10.78 percent.
Among the various tax categories highlighted in the report, only income taxes surpassed expectations. Still, every revenue stream registered some level of growth compared to FY2022/23, a testament to the resilience and incremental strengthening of Uganda’s domestic revenue systems.
A Nation’s revenue effort amid global realities
At the heart of the government’s fiscal strategy lies the ambition to raise the domestic revenue effort to 14.3 percent of gross domestic product [GDP], up from 13.8 percent the previous year. But in FY2023/2024, this goal remained out of reach, as the actual figure trailed behind at an average of 11.5 percent, sustained over the past decade. Despite this, the report shows Uganda’s trajectory remained positive.
Significantly, the country continued to shift its reliance toward domestic tax sources. The share of domestic taxes to total revenue grew from 55.9 percent in FY2020/21 to 59.1 percent in FY2023/24, while non-tax revenues slightly improved their contribution from 6.9 percent to 7.3 percent. Conversely, international trade taxes saw a steady decline, falling to 33.6 percent, a direct consequence of Uganda’s commitment to regional trade agreements such as EAC, COMESA, and the Africa Continebtal Free Trade Area [AfCFTA]. These frameworks, designed to facilitate trade and economic integration, came at the cost of reduced customs revenues, as more imports entered Uganda duty-free.
The revenue enhancement measures that fell short
The government’s strategy to bolster domestic revenue included revenue enhancement measures, with projected yields of Shs 1.64trn. Unfortunately, the actual yield stood at a mere Shs 158.09 billion.
What went wrong?
According to the report, tax administration measures were expected to contribute Shs 1.74trn in the period under review, while tax policy measures instead registered a loss of Shs 583.47 billion. This loss stemmed from deliberate policies supporting import substitution and export promotion, including the stay of application of the Common External Tariff and the duty remission scheme, policies with long-term goals but short-term costs.
Tax administration: wins, woes, and the digital push
Despite the revenue shortfalls, there were notable successes in improving the tax administration landscape:
The taxpayer register expanded significantly, with over 1mln new taxpayers added — a 29.22 percent increase, well above the 17 percent target.
The Electronic Fiscal Receipting and Invoicing Solution [EFRIS] saw encouraging usage: 77,967 taxpayers were registered; 91 percent of VAT-registered businesses were actively issuing e-receipts.
However, 19 percent of VAT-registered taxpayers, including diplomats and public international bodies, remained outside the system.
The Digital Tax Solution [DTS] had taken root across 1,249 sites, comprising manufacturers and importers. Through DTS enforcement and amendments, the URA recovered Shs 16.17bln, while seizures and compliance operations under customs contributed another Shs 149.63bln from 20,920 enforcement actions.
Challenges behind the numbers
Still, Uganda’s revenue journey was hampered by several systemic and external challenges:
- Government tax arrears: The Government owed URA Shs 571bln by May 2024, undermining the state’s credibility in tax compliance.
- ICT instability: URA’s digital infrastructure suffered from repeated outages, which disrupted tax filings and payments, and slowed operations across the board.
- Human resource constraints: The URA lost 122 staff during the year, and most positions remained unfilled. High turnover weakened capacity and institutional memory.
- Low morale and poor service delivery: Many taxpayers expressed dissatisfaction with the quality of public services, leading to waning tax compliance motivation.
- The informal economy continued to elude regulatory oversight, as a significant share of economic activity occurred outside the formal tax net.
- Riots in Kenya, a major trade corridor for Uganda, caused disruptions in customs revenue collections due to blocked supply chains and delayed goods.
The Way Forward
The FY2023/24 story of Uganda’s domestic revenue is one of measured progress amidst complexity. The government made bold projections and took decisive steps toward mobilizing domestic resources. While it missed its targets, the overall revenue still grew, systems improved, and institutional reforms took root.
Yet, structural challenges remain. Enhancing ICT systems, retaining skilled personnel, broadening the tax base, and improving public service delivery will be essential. At the same time, Uganda must balance its regional trade obligations with domestic revenue needs.
In the end, the report tells a story not just of numbers, but of a nation in pursuit of economic self-reliance, steadily, if not always smoothly, building the fiscal foundations for future growth.
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