This study exploits the staggered implementation of Uganda’s 1997-2012 commitments under the East African Community (EAC)
and Common Market for Eastern and Southern Africa (COMESA) trade liberalization programs to identify the causal impact of
external tariff reductions on domestic revenue performance. Merging administrative customs and tax data with a newly digitized
schedule of applied preferential tariffs, we construct a product-level panel that tracks statutory rates, effective duty collections, VAT
and excise yields, and firm-level compliance from 1995 to 2018. Using a difference-in-differences strategy that instruments for
liberalization intensity with pre-agreement MFN tariffs, we find that a 10-percentage-point decline in import duties reduces customs
revenue by 6.3 % in the short run but is offset within four years by a 7.8 % rise in VAT and excise collections, yielding a small
positive net fiscal effect. Revenue recovery is driven by import substitution elasticities of 2.1, a doubling of registered importers, and
improved tax compliance among previously informal firms. Sector-specific analysis reveals stronger resilience in manufacturing
inputs and consumer nondurables, whereas luxury goods display persistent shortfalls. Counterfactual simulations indicate that 88 %

of the foregone tariff revenue would have been lost anyway through smuggling and mis-invoicing under the status quo. Our findings
suggest that low-income countries can safeguard fiscal space during external liberalization by coupling tariff reforms with
administrative modernization and complementary domestic consumption taxes.