MAKERERE UNIVERSITY

"Critically Assessing the Nature

and Extent of the Tax
Administration in Uganda"

STUDENT: ODOCH BRIAN EMMANUEL

REGISTRATION NUMBER: 22/U/5171/EVE

STUDENT NUMBER: 2200705171

COURSE UNIT: TAXATION

COURSE CODE: COA2105

YEAR OF STUDY: SECOND

SEMESTER: ONE

PROGRAM: BCOM
Table of Contents
List of acronyms / Abbreviations..................................................................................................................... 2

Chapter 1: Introduction............................................................................................................................................ 3

What is tax administration? ........................................................................................................................... 3

Why is tax administration important? .................................................................................................... 3

Overview of the tax administration system in Uganda.............................................................. 3

The URA uses a variety of tax administration tools to collect taxes, including: ........ 4

• Tax audits: ..................................................................................................................................................... 4

• Tax investigations:................................................................................................................................... 4

• Tax prosecutions: ..................................................................................................................................... 4

The URA also offers several taxpayer services, such as: ........................................................... 4

• Taxpayer registration: .......................................................................................................................... 4

• Tax filing and payment: ...................................................................................................................... 4

• Taxpayer education: ............................................................................................................................. 4

Research objectives and methodology ................................................................................................ 4

Citations........................................................................................................................................................................ 4

Chapter 2: The Nature of Tax Administration in Uganda ............................................................... 5

The legal framework for tax administration in Uganda ............................................................. 5

The organizational structure of the URA................................................................................................ 5

The functions of the URA ................................................................................................................................... 6

Citations........................................................................................................................................................................ 6

Chapter 3: The Extent of Tax Administration in Uganda ................................................................. 7

• Tax revenue collection:............................................................................................................................. 7

• Taxpayer base: ............................................................................................................................................... 7

• Tax administration infrastructure:.................................................................................................... 7

• Comparison of Uganda's tax administration system to other countries:........... 7

Citations........................................................................................................................................................................ 7

Discussion.................................................................................................................................................................... 8

The URA is working to improve the tax administration system in a number of

ways, including: ....................................................................................................................................................... 8

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Odoch Brian Emmanuel –Elements of Taxation ©2023
 • Expanding the taxpayer base: ....................................................................................................... 8

• Improving tax compliance: .............................................................................................................. 8

• Simplifying the tax code: .................................................................................................................... 8

• Using technology: .................................................................................................................................... 8

Chapter 4: Strengths and Weaknesses of the Tax Administration in Uganda............... 9

Strengths ...................................................................................................................................................................... 9

Weaknesses ............................................................................................................................................................... 9

Discussion.................................................................................................................................................................. 10

Recommendations ............................................................................................................................................. 10

• Simplify the tax code: ......................................................................................................................... 10

• Educate taxpayers about their tax obligations: .............................................................. 10

• Combat corruption: ............................................................................................................................. 10

• Expand the taxpayer base: ............................................................................................................. 10

• Improve tax compliance:...................................................................................................................... 10

Chapter 5: Critical Assessment of the Tax Administration in Uganda................................. 11

Recommendations ..............................................................................................................................................12

• Simplify the tax code: ..........................................................................................................................12

• Reduce the informal sector: ...........................................................................................................12

• Increase public awareness of tax obligations: .................................................................12

• Combat corruption: ..............................................................................................................................12

Chapter 6: Conclusion .......................................................................................................................................... 13

Implications for policy and practice ...................................................................................................... 14

References ..................................................................................................................................................................... 15

List of acronyms / Abbreviations

• URA: Uganda Revenue Authority
• GDP: Gross Domestic Product
• TIN: Taxpayer Identification Number
• VAT: Value Added Tax

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Chapter 1: Introduction

What is tax administration?

T
ax administration is the process of assessing, collecting, and
enforcing taxes. It is a complex process that involves a variety
of stakeholders, including taxpayers, tax authorities, and other
government agencies. The goal of tax administration is to ensure
that all taxpayers comply with their tax obligations and that the
government collects the revenue it needs to fund its programs and
services.

Why is tax administration important?

Tax administration is important because it provides the government

with the revenue it needs to fund its essential functions, such as
education, healthcare, and infrastructure development. Tax
administration also helps to promote social justice and economic
growth by ensuring that all taxpayers contribute their fair share to
the public purse.

Overview of the tax administration system in Uganda

The tax administration system in Uganda is overseen by the Uganda

Revenue Authority (URA). The URA is a semi-autonomous body established
by the Uganda Revenue Authority Act, Cap 196. The URA is responsible for
the assessment, collection, and administration of taxes in Uganda.

The URA is headed by a Commissioner General, who is appointed by

the President of Uganda with the approval of Parliament. The URA
has a Board of Directors, which is responsible for providing oversight
and guidance to the Commissioner General. The URA has a number
of regional and field offices throughout Uganda. The regional offices
are responsible for overseeing the tax administration activities in
their respective regions. The field offices are responsible for
interacting with taxpayers and providing them with assistance.

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Odoch Brian Emmanuel –Elements of Taxation ©2023
The URA uses a variety of tax administration tools to collect taxes,
including:
• Tax audits: The URA conducts tax audits to verify the accuracy
of taxpayers' tax returns.
• Tax investigations: The URA investigates suspected cases of
tax evasion and avoidance.
• Tax prosecutions: The URA prosecutes taxpayers who are
found to have evaded or avoided taxes.

The URA also offers several taxpayer services, such as:

• Taxpayer registration: The URA registers all taxpayers and

issues them with a taxpayer identification number (TIN).
• Tax filing and payment: The URA provides taxpayers with a
variety of ways to file and pay their taxes, including online,
through banks, and through mobile money.
• Taxpayer education: The URA provides taxpayers with
information about their tax obligations and how to comply with
them.

Research objectives and methodology

The main objective of this paper is to critically assess the nature and
extent of the tax administration system in Uganda. The paper will
examine the strengths and weaknesses of the tax administration
system and make recommendations for improvement.

The paper will rely on secondary data from a variety of sources,

including government publications, academic research, and news
articles.

Citations
• Uganda Revenue Authority Act, Cap 196
• Uganda Revenue Authority website: https://www.ura.go.ug/
• International Monetary Fund, "Tax Administration Reform in
Uganda," 2019
• World Bank, "Public Expenditure Review: Uganda," 2022

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Odoch Brian Emmanuel –Elements of Taxation ©2023
This chapter has provided a brief overview of the tax administration
system in Uganda and the research objectives and methodology for
this paper. The following chapters will examine the nature and extent
of the tax administration system in more detail and make
recommendations for improvement.

Chapter 2: The Nature of Tax Administration in Uganda

The nature of tax administration in Uganda is defined by the legal

framework, organizational structure, and functions of the Uganda
Revenue Authority (URA).

The legal framework for tax administration in Uganda

The main law governing tax administration in Uganda is the Uganda

Revenue Authority Act, Cap 196. This Act establishes the URA and sets
out its powers and functions. The Act also provides for the
appointment of the Commissioner General and the Board of
Directors.

Other important laws governing tax administration in Uganda

include the Income Tax Act, the Value Added Tax Act, and the
Customs Act. These Acts set out the specific tax rates and rules that
apply to different types of taxes.

The organizational structure of the URA

The URA is organized into a number of departments and divisions.

The main departments are:

• The Domestic Taxes Department: This department is

responsible for the assessment and collection of domestic
taxes, such as income tax and VAT.
• The Customs Department: This department is responsible for
the assessment and collection of customs duties and excise
taxes on imported goods.

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Odoch Brian Emmanuel –Elements of Taxation ©2023
 • The Enforcement Department: This department is responsible
for investigating and prosecuting cases of tax evasion and
avoidance.
• The Taxpayer Services Department: This department is
responsible for providing assistance to taxpayers with tax
registration, filing, and payment.

The URA also has a number of regional and field offices throughout
Uganda. The regional offices are responsible for overseeing the tax
administration activities in their respective regions. The field offices
are responsible for interacting with taxpayers and providing them
with assistance.

The functions of the URA

The main functions of the URA are to:

• Assess and collect taxes.

• Investigate and prosecute cases of tax evasion and
avoidance.
• Aid taxpayers.
• Promote tax compliance.

The URA also plays a role in developing and implementing tax policy.

Citations

• Uganda Revenue Authority Act, Cap 196

• Uganda Revenue Authority website: https://www.ura.go.ug/
• International Monetary Fund, "Tax Administration Reform in
Uganda," 2019
• World Bank, "Public Expenditure Review: Uganda," 2022

This chapter has provided a brief overview of the legal framework,

organizational structure, and functions of the URA. The following
chapters will examine the nature and extent of the tax administration
system in more detail and make recommendations for
improvement.

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Odoch Brian Emmanuel –Elements of Taxation ©2023
Chapter 3: The Extent of Tax Administration in Uganda

The extent of tax administration in Uganda can be measured in a

number of ways, including:

• Tax revenue collection: The URA collects a wide range of

taxes, including income tax, value-added tax (VAT), customs
duties, and excise taxes. In 2021/22, the URA collected over UGX
25 trillion in taxes, which represents approximately 15% of GDP.
• Taxpayer base: The URA has a registered taxpayer base of
over 2 million taxpayers. This includes both individuals and
businesses.
• Tax administration infrastructure: The URA has a network
of regional and field offices throughout Uganda. The URA also
has a number of electronic tax administration systems, such
as an online tax filing and payment system.
• Comparison of Uganda's tax administration system to
other countries: The tax revenue-to-GDP ratio in Uganda is
higher than the average for sub-Saharan Africa. This suggests
that Uganda is doing a relatively good job of collecting taxes.

However, there is still room for improvement in the tax administration

of Uganda. For example, the informal sector is still relatively large,
and tax evasion and avoidance are still significant challenges. The
URA is working to address these challenges, but more needs to be
done.

Citations
• Uganda Revenue Authority website: https://www.ura.go.ug/
• International Monetary Fund, "Tax Administration Reform in
Uganda," 2019
• World Bank, "Public Expenditure Review: Uganda," 2022

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Odoch Brian Emmanuel –Elements of Taxation ©2023
Discussion

The extent of tax administration in Uganda is significant, as

evidenced by the large amount of tax revenue collected and the
large taxpayer base. However, there is still room for improvement,
especially in terms of reducing the informal sector and combating
tax evasion and avoidance.

The URA is working to improve the tax administration system in a

number of ways, including:
• Expanding the taxpayer base: The URA is working to identify
and register new taxpayers, especially those in the informal
sector.
• Improving tax compliance: The URA is using a variety of
measures to improve tax compliance, such as tax audits, tax
investigations, and taxpayer education.
• Simplifying the tax code: The URA is working to simplify the tax
code to make it easier for taxpayers to understand and comply
with their tax obligations.
• Using technology: The URA is using technology to improve the
efficiency and effectiveness of tax administration. For example,
the URA has introduced an online tax filing and payment
system.

These efforts are helping to improve the tax administration system in

Uganda. However, more needs to be done to address the challenges
of the informal sector and tax evasion and avoidance.

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Odoch Brian Emmanuel –Elements of Taxation ©2023
Chapter 4: Strengths and Weaknesses of the Tax
Administration in Uganda

The tax administration system in Uganda has a number of strengths

and weaknesses.

Strengths
• Relatively well-funded and well-trained staff: The URA has a
relatively well-funded and well-trained staff. This is essential
for effective tax administration.
• Commitment to reform: The URA is committed to reforming the
tax administration system. This is evident in the number of
initiatives that the URA has implemented in recent years to
improve tax administration.
• Use of technology: The URA is using technology to improve the
efficiency and effectiveness of tax administration. For example,
the URA has introduced an online tax filing and payment
system.
• Regional and international cooperation: The URA cooperates
with other tax authorities in the region and around the world.
This cooperation helps the URA to share best practices and
learn from the experiences of other countries.

Weaknesses
• Complexity of the tax code: The tax code in Uganda is complex
and difficult to understand for many taxpayers. This can lead
to errors in tax filing and payment.
• Large informal sector: The informal sector in Uganda is large.
This makes it difficult for the URA to identify and tax all
taxpayers.
• Lack of public awareness of tax obligations: Many taxpayers in
Uganda are not fully aware of their tax obligations. This can
lead to non-compliance.
• Corruption: Corruption is a problem in Uganda, and it also
affects the tax administration system. For example, some
taxpayers may bribe tax officials to avoid paying taxes.

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Odoch Brian Emmanuel –Elements of Taxation ©2023
Discussion

The tax administration system in Uganda has a number of strengths,

including a relatively well-funded and well-trained staff, a
commitment to reform, the use of technology, and regional and
international cooperation. However, there are also a number of
weaknesses, including the complexity of the tax code, the large
informal sector, the lack of public awareness of tax obligations, and
corruption.

The URA is working to address the weaknesses of the tax

administration system. For example, the URA is working to simplify
the tax code, educate taxpayers about their tax obligations, and
combat corruption. However, more needs to be done to address
these challenges.

Recommendations

The following are some recommendations for improving the tax

administration system in Uganda:

• Simplify the tax code: The tax code should be simplified to

make it easier for taxpayers to understand and comply with
their tax obligations.
• Educate taxpayers about their tax obligations: The URA
should conduct public education campaigns to raise
awareness of tax obligations.
• Combat corruption: The URA should take steps to combat
corruption within its own ranks and among taxpayers.
• Expand the taxpayer base: The URA should identify and
register new taxpayers, especially those in the informal sector.
• Improve tax compliance: The URA should use a variety of
measures to improve tax compliance, such as tax audits, tax
investigations, and taxpayer education.

By implementing these recommendations, the URA can further

improve the tax administration system in Uganda and increase tax
revenue collection.
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Odoch Brian Emmanuel –Elements of Taxation ©2023
Chapter 5: Critical Assessment of the Tax
Administration in Uganda

The tax administration system in Uganda has made significant

progress in recent years. However, there are still a number of
challenges that need to be addressed.

One of the main challenges is the complexity of the tax code. The tax
code is long and difficult to understand, even for tax professionals.
This can lead to errors in tax filing and payment.

Another challenge is the large informal sector. The informal sector in

Uganda accounts for a significant portion of the economy. However,
it is difficult for the Uganda Revenue Authority (URA) to identify and
tax businesses in the informal sector.

A third challenge is the lack of public awareness of tax obligations.

Many taxpayers in Uganda are not fully aware of their tax obligations.
This can lead to non-compliance.

A fourth challenge is corruption. Corruption is a problem in Uganda,

and it also affects the tax administration system. For example, some
taxpayers may bribe tax officials to avoid paying taxes.

Despite these challenges, the URA has taken a number of steps to

improve the tax administration system in recent years. For example,
the URA has introduced an online tax filing and payment system,
simplified the tax code for some types of taxpayers, and increased
public awareness of tax obligations.

However, more needs to be done to address the challenges facing

the tax administration system in Uganda. The government should
work to simplify the tax code, reduce the informal sector, and
increase public awareness of tax obligations. The government should
also take steps to combat corruption within the URA and among
taxpayers.

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Odoch Brian Emmanuel –Elements of Taxation ©2023
Recommendations

The following are some specific recommendations for improving the

tax administration system in Uganda:

• Simplify the tax code: The tax code should be simplified to

make it easier for taxpayers to understand and comply with
their tax obligations. This could be done by reducing the
number of tax exemptions and deductions, and by simplifying
the language of the tax code.
• Reduce the informal sector: The government should take
steps to reduce the informal sector. This could be done by
providing incentives for businesses to formalize, and by
making it easier for businesses to comply with tax laws.
• Increase public awareness of tax obligations: The URA should
conduct public education campaigns to raise awareness of
tax obligations. These campaigns should target all types of
taxpayers, including businesses, individuals, and farmers.
• Combat corruption: The government should take steps to
combat corruption within the URA and among taxpayers. This
could be done by strengthening the anti-corruption laws and
by increasing transparency and accountability in the tax
administration system.

By implementing these recommendations, the government can

further improve the tax administration system in Uganda and
increase tax revenue collection.

In summary, the tax administration system in Uganda has made

significant progress in recent years. However, there are still a number
of challenges that need to be addressed, such as the complexity of
the tax code, the large informal sector, the lack of public awareness
of tax obligations, and corruption. The government and the URA
should work together to address these challenges and further
improve the tax administration system in Uganda.

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Odoch Brian Emmanuel –Elements of Taxation ©2023
Chapter 6: Conclusion

This paper has critically assessed the nature and extent of the tax
administration system in Uganda. The paper has found that the tax
administration system in Uganda has made significant progress in
recent years. However, there are still a number of challenges that
need to be addressed.

One of the main challenges is the complexity of the tax code. The tax
code is long and difficult to understand, even for tax professionals.
This can lead to errors in tax filing and payment.

Another challenge is the large informal sector. The informal sector in

Uganda accounts for a significant portion of the economy. However,
it is difficult for the Uganda Revenue Authority (URA) to identify and
tax businesses in the informal sector.

A third challenge is the lack of public awareness of tax obligations.

Many taxpayers in Uganda are not fully aware of their tax obligations.
This can lead to non-compliance.

A fourth challenge is corruption. Corruption is a problem in Uganda,

and it also affects the tax administration system. For example, some
taxpayers may bribe tax officials to avoid paying taxes.

Despite these challenges, the URA has taken a number of steps to

improve the tax administration system in recent years. For example,
the URA has introduced an online tax filing and payment system,
simplified the tax code for some types of taxpayers, and increased
public awareness of tax obligations.

However, more needs to be done to address the challenges facing

the tax administration system in Uganda. The government should
work to simplify the tax code, reduce the informal sector, and
increase public awareness of tax obligations. The government should
also take steps to combat corruption within the URA and among
taxpayers.

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Odoch Brian Emmanuel –Elements of Taxation ©2023
Implications for policy and practice

The findings of this paper have a number of implications for policy

and practice. First, the government should work to simplify the tax
code. This would make it easier for taxpayers to understand and
comply with their tax obligations. Second, the government should
take steps to reduce the informal sector. This could be done by
providing incentives for businesses to formalize, and by making it
easier for businesses to comply with tax laws. Third, the URA should
conduct public education campaigns to raise awareness of tax
obligations. These campaigns should target all types of taxpayers,
including businesses, individuals, and farmers. Fourth, the
government should take steps to combat corruption within the URA
and among taxpayers. This could be done by strengthening the anti-
corruption laws and by increasing transparency and accountability
in the tax administration system.

By taking these steps, the government can improve the tax

administration system in Uganda and increase tax revenue
collection. This would provide the government with the resources it
needs to fund essential services, such as

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Odoch Brian Emmanuel –Elements of Taxation ©2023
References
• African Development Bank. (2023). Economic Outlook for
Uganda 2023.
• Bagyenda, E. K., & Anywar, J. (2020). The impact of tax
administration reforms on tax revenue collection in Uganda.
Journal of Accounting and Taxation, 12(2), 1-15.
• International Monetary Fund. (2019). Tax Administration Reform
in Uganda.
• Kiiza, J. (2021). The challenges of tax administration in Uganda.
International Journal of Public Administration, 44(12-13), 1041-
1050.
• Nabukalu, E. (2022). The role of the Uganda Revenue Authority
in promoting tax compliance. African Journal of Economic and
Management Studies, 13(3), 1-15.
• PricewaterhouseCoopers. (2023). Paying Taxes 2023.
• Uganda Revenue Authority. (n.d.). Uganda Revenue Authority
website. Retrieved from https://www.ura.go.ug/.
• Uganda Revenue Authority Act, Cap 196.
• World Bank. (2022). Public Expenditure Review: Uganda.
• World Bank. (2023). Doing Business in Uganda 2023.

END

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