A study by Ministry of Finance, Planning and Economic Development has found that Uganda’s 10-year tax holiday policy generates positive economic returns, despite ongoing concerns about its fiscal cost. The analysis shows that for every UGX 1 in revenue forgone, qualifying firms generate UGX 2.49 in benefits, while exporters yield UGX 1.85.
The findings indicate that sectors such as manufacturing and export agriculture deliver the strongest returns and contribute significantly to employment, although overall gains in exports and local supply linkages remain limited. While tax incentives support firm growth and investment, their impact on government revenue is modest and short-lived, highlighting existing fiscal trade-offs.
The study concludes that although tax incentives are beneficial, improved targeting is necessary to better align them with Uganda’s broader economic growth and revenue objectives.
Below are the details:
