finance 11 June 2026 Daily Monitor (Uganda)

Uganda's Budget: Corporations Dodge, Politicians Spend, Citizens Foot the Bill

While the Ugandan government's budget expands, questions arise over the persistent reliance on ordinary taxpayers, the significant revenue losses from corporate tax avoidance, and the generous incentives afforded to businesses, leading to an uneven distribution of the fiscal burden. Source: https://www.monitor.co.ug/uganda/business/finance/budget-corporations-dodge-politicians-spend-citizens-pay--5493000

Uganda’s national budget is increasingly financed by its ordinary citizens, while corporations and wealthy individuals often leverage loopholes and exemptions to minimize their contributions. Despite a growing number of registered taxpayers, a significant portion remains inactive, and tax collections are heavily skewed towards Pay As You Earn (PAYE) deductions from salaried workers. This situation, termed “tax deepening” by analysts, means the government extracts more revenue from existing taxpayers rather than broadening the tax base.

This imbalance is exacerbated by generous tax holidays and exemptions granted to corporations, leading to substantial foregone revenue estimated to be around 2% of GDP annually. Furthermore, issues like profit shifting, transfer pricing, and technically advanced tax-minimization strategies employed by multinational corporations contribute to significant annual revenue losses, estimated in the billions of shillings. These practices, coupled with a stagnant tax-to-GDP ratio that lags behind regional and global averages, indicate that economic growth is not translating into a proportionally larger share of national income captured by the government.

Meanwhile, the burden on the average Ugandan is compounded. They face indirect taxes like VAT and excise duties on everyday goods and services, which are regressive in nature. Even Members of Parliament have selectively exempted several of their allowances from taxation. This contrasts sharply with the country’s mounting public debt, now exceeding Shs130 trillion, with nearly 40% of domestic revenue allocated to debt servicing alone. This leaves less funding for critical sectors like health, education, and infrastructure, raising concerns about the fairness and sustainability of Uganda’s fiscal system.

Africa Kiiza, a PhD Fellow at Universität Hamburg, argues that Uganda’s budget reflects economic power imbalances, with ordinary citizens bearing a disproportionate share while corporate and high-wealth fiscal spaces remain undertaxed. Reforms in tax incentives, enhanced corporate transparency, robust enforcement, and international tax cooperation are deemed crucial to address these challenges and ensure Uganda’s long-term development aspirations are met.