This paper presents a comprehensive diagnostic of Uganda’s tax administration system, drawing on three decades of administrative
data, household and firm surveys, and a new set of original interviews with tax officials, taxpayers, and civil-society actors. We find
that although Uganda has tripled its domestic revenue-to-GDP ratio since 1991, collections remain among the lowest in Sub-Saharan
Africa—just 13.6 percent of GDP in FY2022—leaving the state highly aid-dependent and constraining public-goods provision. Three
structural constraints dominate. First, the economic structure is dominated by smallholder agriculture and informal microenterprises
that are costly to tax; only 1.4 percent of adults file personal income tax, and VAT compliance among registered firms is below 50
percent. Second, administrative capacity is thin: the Uganda Revenue Authority (URA) collects 92 percent of domestic revenue with
roughly one auditor per 1,700 taxpayers, and staff turnover in core enforcement units exceeds 15 percent annually. Third,
governance deficits—pervasive rent-seeking, politically motivated exemptions, and low perceived fairness—erode voluntary
compliance and increase collection costs. Exploiting newly digitised customs and domestic tax records, we document large,
persistent compliance gaps: firms connected to the ruling party are 20–25 percent less likely to face an audit; politically exposed
importers under-report unit prices by 11 percent relative to arm’s-length transactions; and exemptions granted through discretionary

ministerial waivers cost 1.1 percent of GDP in FY2021 alone. Difference-in-differences estimates show that the 2014 introduction of
electronic fiscal devices (EFDs) raised VAT remittances by 9 percent among treated firms, but effects were concentrated in Kampala
and disappeared once enforcement weakened. A randomised controlled trial embedded in the 2022 rental-income tax pilot
demonstrates that simple deterrence letters increased registration by 12 percentage points and payments by 28 percent, but only
when signed by a senior URA official, highlighting the centrality of credible enforcement. We conclude with a political-economy
interpretation: Uganda’s tax bargains remain “coercive but narrow,” extracting revenue from a small formal elite while leaving vast
informal sectors untouched in exchange for political acquiescence. Incremental administrative fixes—digitalisation, third-party data
matching, and risk-based audits—can yield modest gains, but substantial, sustained increases in revenue will require renegotiating
this bargain, broadening the tax base, and insulating the URA from political interference.