Uganda currently has a register of 3.5 million taxpayers, which has more than doubled in the last four financial years from just 1.6 million taxpayers in the year ended June 2020. URA data indicates that the register grew to 1.8 million in the year ended 2021 from 1.6 million, before expanding to more than 2.6 million in the financial year ended June 2022.
URA also indicates that net revenue collections have been improving over the years, growing from Shs16.6 trillion in the period ended June 2020 to Shs25.2 trillion, representing a 66.5 percent growth in the four financial years to June 2023. The growth in tax revenue and the register has been instrumental in supporting the expansion of the tax to gross domestic product ratio, which in the four years to June 2023 has expanded by 1.64 percent from 11.99 percent in June 2020 to 13.63 percent.
Despite the growth, the majority of Ugandans remain outside the taxable fold, with many businesses and individuals, especially in agriculture and small enterprises, not contributing to the national treasury. URA has been working on different measures, such as digital tax solutions, to bring more taxpayers into the tax fold. The measures seem to be paying off given that the tax register has grown by 45.5 percent in the four financial years to June 2023, even as the majority of taxpayers still contribute just a small share to the national treasury.
The Uganda Revenue Authority noted that at least 74.5 percent of Uganda’s taxes, which is more than three-quarters, are collected from just 1,000 taxpayers. This group is classified as top taxpayers. However, URA does not provide details of which sectors they fall into, but the data indicates that manufacturing, wholesale, and retail trade, which includes the repair of motor vehicles and motorcycles, and financial and insurance activities generated the largest share of tax revenue, contributing 3.2%, 3.7%, and 1.4%, respectively.
Data from the Annual Data Book 2022/23 indicates that URA collected Shs19.2 trillion from just 1,000 taxpayers, out of the total Shs25.2 trillion mobilised in the period. This represents an increase from the Shs15.97 trillion or 72.3 percent mobilized in the year ended June 2022. Collections from the top 1,000 have been dominating tax revenues over the years, contributing at least 75.8 percent and 76.8 percent of total revenues during the two financial years ended June 2020 and June 2021, respectively.
During the year ending June 2023, URA data shows that taxpayers outside the top 1,000 contributed just 25.5 percent of the total tax revenue, amounting to Shs6.6 trillion. This is significantly lower than the Shs19.2 trillion collected from the top 1,000 taxpayers. Over the past four financial years, contributions from those outside the top 1,000 have consistently been low, averaging 25.1 percent.
At the Uganda Revenue Authority’s 17th Annual Taxpayers Appreciation Awards in November, Coca-Cola was named the most compliant taxpayer, receiving the Excel Award for paying over Ugx 319 billion in taxes and maintaining a 100% filing ratio across all tax heads. Close runners-up were Chop Gaming Limited (Betpawa) and Bank of Baroda.
The Vantage Award, which honors organizations excelling in consistent, timely, and transparent tax payments, recognized winners from various regions. Notable awardees included Erianah Glass Matt and Hardware from the mid-western region, Khemis Yunus from West Nile, Uzima Chicken LTD from Kampala metro, Church of Uganda Kisiizi Hospital from the south-west, and Kach-AP Global Forwarders Ltd from the east.
At the event, Prime Minister Rt. Hon. Robinah Nabbanja emphasized the importance of tax compliance for government service delivery, urging Ugandans to pay their taxes to reduce donor dependence. URA’s Commissioner General John Musinguzi highlighted the need to raise Uganda’s tax-to-GDP ratio from the current 14% to about 20% in the next 2-3 years to support significant government projects. The awards started in 2005, recognize taxpayers who show increased compliance.
During the 2020 election campaigns in eastern Uganda, President Museveni praised the top taxpayers for their significant contributions to the country’s economic growth. Throughout his campaigns in the Karamoja and Teso sub-regions, he emphasized that the peace brought by his government has attracted foreign investors, whose tax contributions are crucial to the economy. In his speech, he highlighted the following top taxpayers as per the tax collection in Uganda:
MTN Uganda: Shs701 billion
Airtel Uganda: Shs500 billion
Bank of Uganda: Shs451 billion
Vivo Energy: Shs423 billion
Total Uganda: Shs399 billion
Nile Breweries: Shs327 billion
Uganda Breweries: Shs304 billion
Bidco Uganda Ltd: Shs192 billion
Stanbic Bank: Shs164 billion
Economic Growth and Taxation
“With the peace in the country, we have attracted foreign investors who have created jobs, especially through factories, and also pay a lot of taxes,” he added. Mr. Museveni highlighted MTN as the highest taxpayer with expected annual returns of Shs701 billion, followed by Airtel with Shs500 billion and Bank of Uganda (BoU) with Shs451 billion. Other top taxpayers include Vivo Energy (Shs423 billion), Total Uganda (Shs399 billion), Nile Breweries (Shs327 billion), Uganda Breweries (Shs304 billion), Bidco Uganda Ltd (Shs192 billion), and Stanbic Bank (Shs164 billion).
Mr. Museveni noted that the government has been able to fund several road construction projects through locally raised taxes. He pointed out that tax collection in Uganda has increased significantly from Shs5 billion in 1986 to Shs21 trillion in the last financial year, highlighting a 4,200-fold increase.
Foreign Investment and Property Repossession
President Museveni attributed the attraction of foreign investors to the decision by the National Resistance Council (NRC) to return properties confiscated from Asians in 1972 by then-President Idi Amin. The government has since disposed of some properties whose owners never returned to reclaim them through the Departed Asians Properties Custodian Board (DAPCB).
Corporate Response
During a media interview, Mr. Charles Mbiire, a director at MTN Uganda, stated that the telecom company would persist in investing and introducing new products to uphold its position as a top taxpayer. He highlighted that MTN’s tax contribution of Shs701 billion encompasses income tax, Value Added Tax, and Pay As You Earn (PAYE) returns.
“We have always insisted on corporate governance, transparency, and good planning to ensure our income keeps growing and hence higher taxes. We will invest more money in the network to expand to more areas in the country. We will also introduce new products to help the country and the people get better services,” Mr. Mbiire said.
URA’s Strategy
During a media interview, Mr. Vincent Seruma, the Assistant Commissioner for Public and Corporate Affairs at URA, underscored the agency’s role in expanding the tax base. He highlighted URA’s strategy of acknowledging and rewarding the top taxpayers nationwide. This approach involves singling out the top 10 taxpayers in each district, thereby incentivizing compliance and fostering a culture of tax responsibility among individuals and businesses.
“We would like to add our voice to that of the President. It has been a long journey to cultivate a culture of transparency. There has been a lot of effort in terms of cooperation between us and the taxpayers. There is also continuous stakeholder engagement to manage issues through conflict resolution, as opposed to staying in court,” Mr. Seruma said.
