SEATINI-Uganda Executive Director, Jane NalungaBy Prisca Wanyenya_Uganda forewent taxes worth Shs5 trillion in the 2024/25 financial year through various tax exemptions, a new report by the Ministry of Finance has revealed. The actual value of these exemptions to the economy is yet to be established.The revelation was made by Solomon Rukundo, Tax Specialist at the Ministry of Finance, while presenting a research report on the Cost-Benefit Analysis of Tax Expenditures in Uganda.The study was conducted by the Southern and Eastern Africa Trade Information and Negotiations Institute (SEATINI-Uganda) during a meeting held at Protea Hotel on September 25, 2026.“Tax expenditures are currently costing Shs5 trillion, about 2.2% of GDP and 15.5% of the tax collected. Disaggregating it into the different tax statutes, VAT is about Shs2 trillion, personal income tax is roughly Shs1 trillion, excise duty Shs853 billion, customs duty Shs708 billion and corporate income tax is Shs431 billion. And remember, corporate income tax is the one that includes the 10-year tax holiday. So, this should at least recalibrate the mindset when it comes to examining tax expenditures,” Rukundo said.Although the report shows tax expenditures grew from Shs3 trillion in 2023/24 to Shs5.1 trillion in 2024/25, Rukundo said the increase does not necessarily mean more exemptions were granted, but could be due to improved data collection and analytical tools.“Sometimes it is not per se that there has been so much growth in additional expenditure. It is just that the reporting and data collection mechanism has improved,” he noted.SEATINI-Uganda Executive Director, Jane Nalunga, said while tax incentives are intended to stimulate investment, employment creation, exports and value addition, they remain broad and unmonitored, thus reducing the domestic revenue available to fund core public services like healthcare and education.“Important questions remain regarding the developmental value generated by the substantial revenues forgone. It remains unclear whether the benefits are sufficient to justify their fiscal cost, whether beneficiary firms perform significantly better than non-beneficiaries, and whether they contribute meaningfully to employment, value addition, poverty reduction and inequality reduction,” Nalunga said.She added that Uganda’s growing public debt and global geopolitical tensions have made it critical to scrutinize tax expenditures.Peter Oumo, Economic Advisor at the Embassy of Ireland, which funded the study, said domestic resource mobilization is critical at a time when Official Development Assistance (ODA) is declining. According to the OECD, global ODA by Development Assistance Committee members amounted to USD 174.3 billion in 2025, a 23.1% decrease from 2024, with the US alone accounting for three-quarters of the decline.Aloysius Kittengo, Program Coordinator for Financing for Development at SEATINI-Uganda, called for a shift from blanket tax incentives to performance-based incentives.“We should monitor and evaluate to ensure Ugandans are benefiting. The revenue foregone should be recouped in the benefits we intend to achieve. If you are going to give incentives, 70% of staff on the wage bill should be Ugandans,” Kittengo said.The report, however, warned against scrapping Value Added Tax (VAT) exemptions. Rukundo argued that studies show VAT exemptions help reduce poverty.“Removing VAT exemptions increases the national poverty rate by 5.4%. Households with children, female-headed households, and those with older persons experience the largest rises in poverty, and the depth of poverty increases for all groups,” Rukundo noted.The post Uganda Lost Shs5 Trillion to Tax Exemptions in One Year – Report appeared first on Business Focus.