New directions for presumptive tax in Uganda

• Report
• Nov 2021
• Arinaitwe Isaac , Asiimwe Wilson , Isingoma Nalukwago Milly , Kaidu Barugahara Tina , Kavuma Susan , Lastunen Jesse , Mwesigye Martin , Noble Michael , Okello Ayo Joseph , Rattenhuber Pia , Waiswa Ronald , Wright Gemma
• WIDER Policy Brief - 8/2021

Abstract

Many countries in Africa have designed simplified tax regimes for small businesses, including presumptive tax, a form of income tax charged on turnover. In Uganda, the most recent presumptive tax reform in July 2020 sought to address past challenges of complexity, regressivity and high tax rates. While the new reform simplifies the presumptive tax regime, it also suffers from challenges with enforcement and has low revenue potential. Alternative reforms presented in this brief, including a low-rate flat tax system, offer ways to simplify the presumptive regime further, with potential to support long-run compliance and revenue generation.