Uganda targets tax collections worth 20% of GDP as URA rolls out new service charter

KAMPALA — The government is targeting to increase tax collections to 20 per cent of Gross Domestic Product (GDP) over the medium term as it seeks to finance development largely from domestic resources, Finance Minister Henry Musasizi has said.

Speaking at the Uganda Revenue Authority’s (URA) post-budget dialogue for the 2026/27 financial year and the launch of the tax body’s new Service Charter in Kampala on Tuesday, Mr Musasizi said the increase from the current tax-to-GDP ratio of about 14 per cent will be driven by digital transformation, expansion of the formal economy, improved tax administration and reforms to tax policy.

The minister said the government expects to raise Shs45.96 trillion in domestic revenue during the 2026/27 financial year, including Shs40.16 trillion from tax collections.

He said the revenue will finance priority investments while supporting fiscal sustainability as Uganda pursues its target of growing the economy to $500 billion over the coming years.

“Countries that have successfully transformed their economies have done so by progressively strengthening their ability to finance development from their own resources,” Mr Musasizi said.

He said the government remains committed to implementing the second Domestic Revenue Mobilisation Strategy to reduce dependence on borrowing and external development assistance.

According to the minister, the 2026/27 budget prioritises sectors with the greatest potential to accelerate economic transformation, create jobs, increase household incomes and expand opportunities for businesses.

Mr Musasizi also urged the private sector to invest, formalise businesses and add value to locally produced goods to support economic growth and broaden the country’s tax base.

At the same event, URA Commissioner General John Musinguzi said improving tax compliance will require both policy reforms and better taxpayer services.

He said ongoing digital transformation and the latest tax reforms are expected to help increase Uganda’s tax-to-GDP ratio to between 18 and 20 per cent over the medium term.

Mr Musinguzi said the newly launched URA Service Charter sets out clear service standards and aims to improve the relationship between the tax authority and taxpayers by providing more efficient services and strengthening mechanisms for resolving disputes without resorting to court.

The annual post-budget dialogue brings together government officials, taxpayers and the private sector to discuss tax measures contained in the national budget and their implications for businesses and the wider economy.