Assessing the effectiveness of tax incentives in Uganda; a case study of Uganda Revenue Authority

Abstract

This study aimed to assess the effectiveness of tax incentives in Uganda. It was premised on three objectives: exploring the relevance of tax incentives in Uganda, assessing the challenges of tax incentives in Uganda, and analysing strategies for improving their effectiveness. The study adopted a cross-sectional and exploratory research design, employing a qualitative study approach. Qualitative data was collected from 17 out of a sample of 20 targeted URA staff, using an interview guide, reaching data saturation. ATLAS-ti Qualitative software (Version 9) was utilized for data analysis. Following transcription and coding, network schematic diagrams were developed. The research findings highlighted the importance of tax incentives in attracting both foreign and local investors, creating employment opportunities, broadening the tax base and enhancing tax compliance, and improving the economy through better balance of payment and sectoral development. The study identified several challenges, including unfair treatment of investors, inadequate tax education, government revenue loss, and weak policy frameworks. Consequently, the study recommended that the government prioritize tax education, conduct regular reviews of tax incentives, improve policy formulation, apply incentives to various sectors, explore non-tax incentives, and encourage local investors to maintain audited books of accounts to benefit from tax incentives.