Over 2.7 million registered taxpayers didn't contribute any revenue last financial year

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The Auditor General has raised concern over the about 2.7 million inactive taxpayers on the Uganda Revenue Authority (URA) list.

In a report to Parliament, Auditor General Edward Akol says over half of all registered taxpayers on the URA list did not contribute any revenue to the Government during the last financial year.

Akol said an analysis of the national tax register indicated that out of 5.25 million registered taxpayers as of June 30, 2025, only 2.52 million, representing 48 per cent, remitted some tax during the year, leaving approximately 2.73 million taxpayers, or 52 per cent, without contributing any tax at all.

Akol said the figures reveal a significant mismatch between the number of registered taxpayers and actual revenue contributors, raising questions about the accuracy of the taxpayer register and the Authority’s ability to enforce compliance.

Auditors noted that the large share of non-contributing taxpayers suggests the register contains many inactive, dormant, or non-compliant entities.

This, they warn, undermines efforts to widen the tax base and limits government revenue at a time when domestic resource mobilisation is critical for funding public services and development programmes.

According to the report, of those who did pay taxes, over one million were employees whose Pay-As-You-Earn (PAYE) tax deductions were automatically withheld by their employers, leaving fewer voluntary contributors among businesses and self-employed taxpayers.

“The low proportion of revenue-contributing taxpayers indicates that the taxpayer register contains a significant number of inactive or non-compliant taxpayers. This frustrates the effectiveness of registration initiatives and suggests that the Authority is not fully leveraging the growing taxpayer base to enhance revenue mobilisation,” Akol warns.

Tax experts interviewed said the situation means that the burden of taxation is carried by a relatively small group of compliant individuals and businesses.

“It becomes difficult to sustain fairness when a small segment of taxpayers consistently finances public services for the majority. If many registered entities are not paying, the system loses credibility,” Francis Muije, a tax consultant with Tax consult said.

In response, the Auditor General said URA management informed the auditors that it has launched a Taxpayer Register Management (TRM) clean-up exercise aimed at identifying inactive, duplicate, or non-operational accounts.

The project seeks to engage dormant taxpayers, encourage them to file returns and pay outstanding obligations, and deactivate those no longer eligible to remain on the register.

Akol recommended that URA should conduct a comprehensive validation of the taxpayer register and roll out targeted compliance programs to bring dormant taxpayers into the system and ensure newly registered businesses begin meeting their obligations promptly.

Officials say the initiative will help create a more accurate database focused on active and compliant taxpayers, improving enforcement and boosting revenue collection. The exercise is expected to be completed by June 2026.