Museveni banks on digitised tax reforms to raise sh37.2 trillion in taxes

KAMPALA - President Yoweri Museveni says the Government aims to raise shillings 37.2 trillion in revenue in the 2025/26 financial year, citing the reduction of tax evasion through the use of digitised tax initiatives as the key strategy to achieve this target.

He made the remarks last week during his 2025 State of the Nation Address ahead of the budget reading this week.

Museveni noted that Uganda’s revenue collection capacity has improved, with projections indicating that shillings 31.9 trillion will be collected by the end of the current fiscal year. This represents 14.3 per cent of the country’s total economic output.

According to the World Bank, 86 per cent of low-income countries collect less than 15 per cent of their GDP in taxes, a level considered inadequate for sustainable development.

“In 1986, the Government collected only shillings five billion in revenue because private businesses and manufacturing had collapsed. When the NRM took power, we embarked on rehabilitating the economy and adopted policies of liberalisation and public sector reform. As a result, revenue collection capacity has improved,” Museveni said.

He added that current revenue levels remain below what is required to fund national development programmes. The President said the Government would intensify anti-corruption efforts through regular audits at the Uganda Revenue Authority (URA) and increase the use of digital systems to reduce human interaction in tax processes.

Among these systems, Museveni emphasised the role of Digital Tax Stamps (DTS)  and Electronic Fiscal Receipting and Invoicing Solutions (EFRIS) in improving real-time monitoring of taxable transactions and ensuring accurate revenue declarations.

The domestic revenue mobilisation strategy identified excise taxes as an area with strong potential.

However, the Government previously lacked a reliable mechanism to track and verify sales reported by firms. In the 2019/20 fiscal year, the government introduced the Digital Tracking Solution, commonly known as Digital Tax Stamps, to curb revenue leakage and under-reporting of excisable goods.

The DTS system, managed by SICPA Uganda under the aegis of URA, is installed at production lines to apply tamper-proof digital stamps to each unit of excisable goods.

These stamps are monitored in real-time, reducing the chances of tax evasion and under-declaration. DTS helps governments combat illicit and undeclared trade by increasing visibility over the manufacturing and importation of goods.

In Uganda and other countries, its implementation has contributed to a decline in the illicit trade of excisable goods and improved taxpayer compliance.

DTS also supports the collection of forensic evidence in fraud investigations and enhance supply chain transparency. The solution has a built-in market surveillance module that helps URA identify tax fraud hotspots and improve enforcement operations and resource allocation.

In May 2025, more than 100 tonnes of goods without DTS were seized and destroyed. These included juices, soft drinks, alcoholic and non-alcoholic beverages, and cement. The products were impounded for failing to meet tax obligations and health and safety standards.

Budget targets

In the sh72.1 trillion budget read yesterday, about 60% is expected to be raised internally. Science, technology, innovation, ICT, and the creative arts lead Uganda’s FY2025/26 National Budget priorities, alongside agro-industrialisation, tourism development and mineral-based industrial growth including oil and gas.

Expenditure allocations 

• Wages and salaries, shillings 8.57 trillion
  
  
• Non-wage recurrent expenditure, shillings 28.33 trillion
  
  
• Development expenditure, shillings 18.24 trillion
  
  
• Domestic debt refinancing, shillings 10.03 trillion
  
  
• Debt amortisation, shillings4.98 trillion
  
  
• Domestic debt repayment to Bank of Uganda shillings 493 billion
  
  
• Domestic arrears, shillings 1.4 trillion
  
  
• Local Government expenditure from own revenue, shillings 328.6 billion