Government has recorded a nearly 40 percent increase in revenue collection, according to the Annual Auditor General Report.
However, the report noted that even with the increase, the country’s tax-to-gross domestic product ratio remains low compared to other developing countries.
The report shows that total revenue collection in the 2024/25 financial year stood at Shs32.357 trillion, up from Shs22.098 trillion, representing a rise of about Shs10 trillion over four years.
This was attributed to the upward trend, partly due to improvements in tax administration by Uganda Revenue Authority (URA), through the ‘introduction of solutions such as Electronic Fiscal Receipting and Invoicing Solution (EFRIS) and Digital Tax Stamps (DTS), which have increased compliance among taxpayers and contributed to the growth in revenue.
The report indicates that the growth was mainly driven by taxes on gains, profits, fees and licences, value added tax (VAT), as well as customs and excise duties.
Revenue from the petroleum sector recorded the highest growth, rising from Shs81b four years ago to Shs264b in the 2024/25 financial year, representing a 69 percent increase.
Taxes on gains, profits, fees, and licences increased from Shs7.578 trillion to Shs11.943 trillion, a 36 percent rise over the same period.
Customs and excise revenue also grew, reaching Shs9.6 trillion from Shs6.755 trillion four years earlier, an increase of 29 percent.
VAT collections rose by 26 percent, from Shs6.452 trillion in to Shs8.779 trillion in the 2024/2025 financial year, while non-tax revenue increased by more than 30 percent, from Shs1.229 trillion to Shs1.765 trillion.
However, the report indicates that the tax-to-GDP ratio remains below the International Monetary Fund recommendation of 15 percent for developing countries.
The tax-to-GDP ratio measures total tax revenue as a percentage of GDP and indicates the share of a country’s output collected by government through taxes.
The report notes that despite the growth in revenue collection, tax-to-GDP ratio remains stood at about 13.4 percent, which show a wide disparities, with the sub-Saharan Africa average of 18.6 percent, the world average of 23 percent.
‘From the analysis, Uganda continues to perform relatively poorly compared to other countries in the region and globally.
The tax base has not widened or deepened sufficiently, leading to increased reliance on debt to bridge the financing gap,’ Auditor General Edward Akol noted in the report.
The report highlights a structural imbalance between economic activity and tax revenue generation, noting that agriculture contributes significantly to GDP but relatively little to tax revenues, with tax revenue remaining heavily concentrated in trade and manufacturing and other services.