Income Tax Evasion in Uganda
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Date
2019
Authors
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Journal ISSN
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Publisher
Economic Policy Research Centre (EPRC)
Abstract
Uganda, just as many developing countries, collects less than potential tax. The country compares poorly to other
low- income countries with regard to income tax revenue mobilization. This paper estimate the baseline amount
of tax owed by comparing income amounts reported on the 2015/16 Uganda Revenue Authority (URA) income
tax returns with similar income amounts households reported on the 2015/16 Uganda National Panel Survey
(UNPS). The paper also combine the UNPS data and the URA income tax data to estimate potential income tax
revenue and the scale of tax evasion in Uganda in 2015/16 by income bracket. The gross tax gap was therefore
estimated at Ug.Shs 1, 783.31 billion, or 52.73 percent of the baseline tax. The manufacturing, wholesale and
retail, information and communication, financial and insurance, real estate, public administration and human
health sectors explain Ug.Shs. 1,512.39 of the tax gap, which is 44.72 percent of the baseline tax. The income
bracket above Ug.Shs 410,000 explain more than 80 percent of the sectoral default. Approximately 755,217
persons did not file for income tax in 2015/16, which is 39 percent rate of default. Audit and compliance activities
managed to recover Ug.Shs 130.37 billion of Ug. Shs. 1,783.31 billion gross tax gap. We recommend for capacity
building in data management and in audit and compliance functions.