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% of GDP in FY2022—leaving the state highly aid-dependent and constraining public-goods provision.

Three structural constraints:

Three structural constraints dominate:

Economic structure: The economy is dominated by smallholder agriculture and informal microenterprises that are costly to tax; only 1.4% of adults file personal income tax, and VAT compliance among registered firms is below 50%.

Administrative capacity: Administrative capacity is thin: the Uganda Revenue Authority (URA) collects 92% of domestic revenue with roughly one auditor per 1,700 taxpayers, and staff turnover in core enforcement units exceeds 15% annually.

Governance deficits: Pervasive rent-seeking, politically motivated exemptions, and low perceived fairness erode voluntary compliance and increase collection costs.

Evidence of governance failures:

Exploiting newly digitised customs and domestic tax records, we document large, persistent compliance gaps:

Firms connected to the ruling party are 20–25% less likely to face an audit.

Politically exposed importers under-report unit prices by 11% relative to arm’s-length transactions.

Exemptions granted through discretionary ministerial waivers cost 1.1% of GDP in FY2021 alone.

Impact of electronic fiscal devices (EFDs):

Difference-in-differences estimates show that the 2014 introduction of electronic fiscal devices (EFDs) raised VAT remittances by 9% among treated firms, but effects were concentrated in Kampala and disappeared once enforcement weakened.

Randomised controlled trial on rental-income tax:

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%, but only when signed by a senior URA official, highlighting the centrality of credible enforcement.

Conclusion – a political-economy interpretation:

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.