This paper evaluates the performance of Uganda’s tax system within the context of low-income countries, focusing on revenue
mobilisation, equity, and administrative efficiency. Despite sustained economic growth, Uganda’s tax-to-GDP ratio remains stagnant
at 13.9%, significantly below the sub-Saharan African average of 16% and its own target of 18% under the Domestic Revenue
Mobilisation Strategy. Key challenges include a narrow tax base, with only 7.1% of businesses and 6.8% of the labour force formally
registered for taxes, and a burgeoning informal sector contributing 28.7% of GDP but less than 1% of tax revenue. Structural barriers
such as weak enforcement, frequent ad hoc policy changes, and a fractured fiscal-social contract—exacerbated by perceptions of
corruption—undermine compliance. Recent reforms, including the 2012–2013 progressive income tax adjustments, yielded UGX 206
billion (USD 57 million) annually in additional revenue and modestly reduced inequality (Gini coefficient declined by 5%). However,
effective tax rates for large firms remain disproportionately low, and generous incentives erode the corporate tax base. The study
concludes that while piecemeal reforms have marginally improved revenue and equity, systemic constraints—informality,
governance deficits, and limited administrative capacity—must be addressed to align Uganda’s tax performance with developmental
needs. Lessons from Uganda underscore the complexity of mobilising domestic resources in poor countries, where technical reforms
intersect with entrenched socio-political challenges.