Uganda is currently facing an aggressive fiscal crisis, yet the latest data from the Ministry of Finance suggests the country is voluntarily bleeding dry.
The revelation that Shs5 trillion was forfeited in tax exemptions during the 2024/25 financial year is not just a dry statistic. It represents 15.5% of our total domestic tax revenue handed back to corporations, foreign investors, and chosen entities while the average citizen defaults on basic survival.
When SEATINI-Uganda and the Embassy of Ireland convened at the Protea Hotel to dissect these numbers, they exposed a core contradiction in our national economic planning. We are aggressively borrowing to plug budget deficits, yet we actively throw away trillions in unmonitored fiscal handouts.
For decades, the prevailing economic narrative in Kampala has been simple: grant long-term tax holidays, , and investments will yield jobs and industrialization. However, as Jane Nalunga, the Executive Director of SEATINI-Uganda, rightly pointed out, there is zero verifiable data proving these beneficiary firms perform better than local companies paying full taxes.
We have institutionalized a system of blanket corporate incentives with no accountability. If a multinational company receives a 10-year corporate income tax holiday, there must be strict, enforceable milestones attached to it.
As proposed during the civil society dialogue, a performance-based system is long overdue. If an entity wants a tax exemption in Uganda, at least 70% of its total wage bill must go directly to Ugandan citizens. Anything less is local exploitation disguised as foreign direct investment.
The timing of this Shs5 trillion revenue gap could not be worse. Global Official Development Assistance (ODA) dropped by 23.1% in 2025 alone, driven heavily by budget cuts from major donors like the United States. The era of international donor funding relies on a diminishing pool of capital. Uganda must fund itself, yet our current strategy involves starving our own public infrastructure.
The Shs5 trillion dropped on corporate tax expenditures could have completely transformed Uganda’s social sectors. This forgone revenue could have:
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- Fully stocked every public health facility with essential medicines.
- Upgraded dilapidated universal primary education schools across rural sub-counties.
- Significantly reduced the national domestic debt burden that eats into our annual budget.
Instead, these trillions remain locked in corporate balance sheets.
Amidst the criticism of corporate giveaways, the Ministry of Finance’s warning regarding Value Added Tax (VAT) exemptions must be taken seriously. The data indicates that completely scrapping VAT exemptions would cause the national poverty rate to spike by 5.4%.
Removing protections on essential consumer goods would instantly crush female-headed households and families caring for the elderly. Therefore, the fiscal strategy going forward must not be a blind, wholesale elimination of all exemptions.
The Ministry of Finance and the Uganda Revenue Authority (URA) must immediately recalibrate their mindsets. Ugandans cannot continue to pay high excise duties, heavy digital items taxes, and aggressive income taxes while large corporations enjoy tax-free operations without showing clear returns on investment.
Blanket tax holidays must end. If the government cannot measure the direct developmental value of a tax exemption, that exemption has no business existing in our tax laws. The Shs5 trillion hole must be plugged before the economy caves in from under us.
The Writer Felix Oketcho is a Businessman In Kampala
