URA bets on tax reforms to hit Shs46 trillion target

The Uganda Revenue Authority (URA) has said the government’s plan to raise domestic revenue to 20 percent of Gross Domestic Product (GDP) within the next four years is achievable, but only if tax compliance improves and more businesses join the tax net.

The assurance comes as the government targets Shs46 trillion in domestic revenue in the 2026/27 financial year, with URA expected to collect Shs40.16 trillion in tax revenue.

The ambitious revenue drive is intended to reduce Uganda’s reliance on borrowing as public debt servicing continues to consume an increasing share of the national budget. It also comes at a time when concessional financing from development partners is shrinking and commercial borrowing remains costly.

Speaking during the National Post-Budget Dialogue in Kampala, Finance Minister Henry Musasizi said stronger domestic revenue mobilisation will enable government to finance more development programmes using locally generated resources instead of debt.

He said the strategy goes beyond tax collection and requires government to improve accountability and public service delivery so that taxpayers see value for their contributions.

“People are more willing to pay taxes when they can see improvements in infrastructure, healthcare, education and other public services,” Mr Musasizi said.

He added that government remains committed to fighting corruption and ensuring tax revenue is spent efficiently.

URA Commissioner General John Musinguzi said achieving the medium-term revenue target would ease pressure on government borrowing and free up resources for essential public services.

He said tax collections increased from about 13 percent of GDP to 14.2 percent during the last financial year despite a slight revenue shortfall, demonstrating that the target of 20 percent is attainable.

Mr Musinguzi attributed the optimism to recent tax reforms approved by Parliament, saying the measures are intended to improve compliance while creating a more predictable tax environment.

Among the key reforms is a change in penalties under the Electronic Fiscal Receipting and Invoicing Solution (EFRIS). Instead of a flat Shs5 million fine for non-compliance, offenders will now pay twice the tax due on the goods or services involved or ten currency points, whichever is higher.

He acknowledged that some businesses may initially feel the impact of the changes but said the reforms are designed to promote fairness and improve voluntary compliance.

Mr Musinguzi added that other amendments seek to simplify tax administration, making it easier for compliant taxpayers to meet their obligations.

As part of efforts to improve taxpayer services, URA also unveiled a new Client Service Charter outlining taxpayers’ rights, service standards and mechanisms for resolving disputes without resorting to court litigation.

The charter also expands access to digital services, customs support and tax exemptions while providing clearer channels for reporting misconduct by URA staff.

The Ministry of Finance said government is strengthening tax administration through greater use of digital systems, technology and data analytics to improve compliance while reducing the cost of tax administration.

Moses Kaggwa, the ministry’s Director of Economic Affairs, said the objective is to broaden the tax base rather than increase tax rates.

“Our focus is not simply increasing taxes. It is expanding the tax base fairly by identifying economic activities that are currently outside the tax system while supporting compliant taxpayers,” Mr Kaggwa said.

He added that sustainable revenue growth depends on expanding economic activity through programmes such as the Parish Development Model, which are expected to increase household incomes and bring more Ugandans into the formal economy.

“As we mobilise revenue, we must do it humanely. Government should relate with taxpayers as partners in national development, not as though every taxpayer is a suspect,” he said.

Civil society organisations welcomed the emphasis on domestic revenue mobilisation but said greater accountability in public spending is necessary to encourage voluntary tax compliance.

Julius Mukunda, Executive Director of the Civil Society Budget Advocacy Group, said taxpayers are more likely to comply when government demonstrates prudent use of public funds.

“We want to see every citizen paying their fair share of taxes, but we also want to see how those taxes are utilised,” he said.

Grace Kobusingye, Programmes Manager at Uganda Debt Network, said transparency and improved service delivery remain essential if government is to build public trust and sustain higher domestic revenue mobilisation.

She said strengthening tax collection will be critical as Uganda seeks to reduce dependence on borrowing despite expectations of future oil revenues.