URA given Shs40 trillion tax target as government unveils 2026/27 budget plan

Kampala — The Uganda Revenue Authority (URA) has been handed one of its most ambitious revenue collection targets yet, with government projecting that domestic revenues will exceed Shs 40 trillion in the 2026/27 financial year to finance the bulk of a Shs 69.399 trillion national budget, according to the National Budget Framework Paper (NBFP) tabled before Parliament in December.

The NBFP for FY2026/27, presented during the December 16, 2025 plenary sitting by the Minister of State for Finance (General Duties), Henry Musasizi, shows that URA is expected to raise Shs 40.090 trillion in domestic revenues, up sharply from an estimated Shs 37.227 trillion in FY2025/26. The projected increase of Shs 2.863 trillion represents one of the largest year-on-year nominal jumps in Uganda’s tax collection history.

The remainder of the budget, government says, will be financed through domestic and external borrowing, underscoring the continued reliance on debt even as tax targets climb.

Explaining the sharp rise, Musasizi told Parliament that the increase is anchored in expectations of stronger economic performance and structural improvements in revenue mobilisation. He cited higher economic growth, an expanding tax base, tighter tax administration, and reforms in non-tax revenue collection as key drivers behind the projection.

“In FY2026/27, domestic revenues are projected to amount to Shs 40.090 trillion, from an estimate of Shs 37.227 trillion in FY2025/26. This translates into nominal growth in revenues of Shs 2.863 trillion,” Musasizi said, adding that the gains would be supported by improved compliance and administrative efficiency.

URA’s targets have been rising steadily over the past decade as government seeks to reduce its dependence on borrowing and donor funding. A few years ago, domestic revenue collections hovered below Shs 20 trillion. More recently, URA has been tasked with adding several trillion shillings to its annual take almost every financial year, driven by expanding government spending, infrastructure ambitions, and growing debt service obligations.

While URA has generally met or narrowly missed recent targets, the growing scale of the annual increases has reignited debate over whether the tax body has the capacity to sustain such rapid growth without placing excessive strain on businesses and households.

The Finance Ministry argues that the medium-term outlook justifies the higher targets. Musasizi told Parliament that domestic revenues are expected to rise significantly over the coming years, supported by the government’s Tenfold Growth Strategy, new tax policy measures, and enhanced tax administration.

He also pointed to tougher oversight of tax incentives, saying government plans to improve accountability for tax holidays and eliminate exemptions that do not support industrialisation. In addition, the anticipated start of oil and gas production is expected to provide a new and significant revenue stream.

However, tax analysts caution that translating projections into actual collections will depend on URA’s enforcement capacity, the pace of economic growth, and the resilience of the private sector. With many businesses still grappling with high interest rates, currency pressures, and elevated operating costs, aggressive revenue targets could prove difficult to meet without widening the tax net rather than intensifying enforcement on existing taxpayers.

As Parliament begins scrutiny of the NBFP, questions are likely to focus not only on the realism of the Shs 40 trillion target, but also on whether URA can achieve it through sustainable tax reforms, rather than short-term measures that risk slowing economic activity.