Uganda targets domestic revenue and smarter tax measures to fund Shs72 trillion budget

The Government of Uganda plans to finance a significant portion of its Shs 72 trillion national budget for the financial year 2025/2026 through enhanced domestic revenue collection, supported by new tax measures and tightened enforcement, the Minister of Finance, Matia Kasaija, has revealed.

Presenting the budget at Kololo Independence Grounds on June 12, Minister Kasaija said the government expects to raise Shs 37.2 trillion in domestic revenue, which will fund about 60 percent of the total budget. The remainder will be covered through borrowing and grants.

“Government has stepped up efforts to mobilise domestic revenue,” Kasaija said, noting that a broad range of strategies would be deployed to meet revenue targets while ensuring economic growth and social equity.

Key Strategies to Raise Funds

To meet the ambitious revenue goal, the government plans to broaden the tax base by focusing on high-potential sectors such as agro-industrialisation, tourism, ICT, minerals (including oil and gas), and small and medium enterprises.

In addition, tax administration reforms are central to the plan. These include:

• Crackdown on corruption at Uganda Revenue Authority (URA) through punitive action against corrupt staff and colluding taxpayers.
• Expanding use of digital systems, including Electronic Fiscal Receipting and Invoicing Solution (EFRIS), digital tax stamps, rental tax solutions, and automated audits.
• Enhanced border surveillance using drones, scanners, and patrols to combat smuggling.
• Reviewing tax exemptions to only support industrial policy and introducing time-bound “sunset clauses” on tax incentives.
• Amendments to tax laws to plug loopholes, increase clarity, and promote voluntary compliance.
• Strengthening URA by recruiting and training new tax officers to improve efficiency.
• Empowering local governments and public entities to boost revenue collection at the grassroots.

“Our focus is on building a fair, transparent, and digitally enabled tax system to improve compliance and reduce leakages,” the Minister said.

Economic Outlook Supports Revenue Drive

The financing strategy rides on a promising economic outlook. Uganda’s economy is projected to grow by 7.0 percent in 2025/26, up from 6.3 percent in the current fiscal year. With the onset of oil and gas production, the economy is expected to hit USD 66.1 billion, pushing the GDP per capita to USD 1,324.

The government expects this growth to drive up private sector activity and employment, expanding the taxable base. At the same time, Uganda’s stable exchange rate, inflation below 5 percent, and robust export growth provide a favorable macroeconomic environment for revenue collection.

Focus on Accountability and Equity

Kasaija assured Ugandans that the budget not only aims to increase revenue but also ensures prudent use of resources. Priority spending areas include health (Shs 5.87 trillion), education (Shs 5.04 trillion), wealth creation (Shs 2.43 trillion), and agro-industrialisation (Shs 1.86 trillion). Social protection, water, and sanitation also feature prominently.

He stressed that resource mobilisation will be matched by service delivery, infrastructure development, and inclusive growth. “This is a people-focused budget to deepen monetisation and ensure prosperity for all,” the Minister said.