Uganda Aims for 20% Revenue-to-GDP Ratio by FY2029/30

The Ugandan government has set an objective to significantly boost its revenue collection, aiming for a revenue-to-GDP ratio of 20% by the financial year 2029/30. Currently standing at 14.7%, this increase signals a strategic shift towards broader economic participation rather than increased taxation on existing entities.

Finance Minister Henry Musasizi emphasized that achieving this goal cannot rely on repeatedly taxing the same individuals and businesses. Instead, he urged Parliament to champion measures that bring more economic activities into the formal tax system, thereby widening the tax base. “The answer cannot simply be higher tax rates. We cannot achieve 20% by continuously taxing the same people more,” Musasizi stated during a recent engagement between the Uganda Revenue Authority (URA) and parliamentary committees.

According to the Minister, the necessary revenue growth will stem from a combination of factors including economic expansion, formalization of businesses, enhanced tax compliance, and more efficient administration of current taxes. Emerging economic sectors and the reduction of revenue leakages are also identified as crucial areas for boosting domestic revenue.

The URA Commissioner General, John Rujoki Musinguzi, acknowledged the evolving tax landscape, citing challenges such as structural informality, the rapid growth of the digital economy, cross-border transactions, and fragmented government data. He stressed the need for the tax administration system to adapt to these changes to effectively identify and integrate businesses into the tax net.

URA plans to enhance revenue performance by mapping priority economic sectors, expanding taxpayer education, improving compliance, and implementing risk-based enforcement strategies. Stronger inter-agency information sharing was also highlighted as vital for identifying taxpayers and addressing revenue leakages.

The discussions underscored the importance of parliamentary involvement in tax policy. Maximus Ochai, Chairperson of the Finance Committee, called for a revised timetable for developing tax policies to allow for more thorough scrutiny by MPs, ideally beginning reviews by the end of December.

This concerted effort aims to strengthen domestic revenue mobilization to support Uganda’s ambitious economic growth targets without over-reliance on borrowing. https://nilepost.co.ug/news/374465/government-targets-20-revenue-to-gdp-ratio-by-fy2029-30