Uganda’s presumptive tax regime exists in law but remains underutilized in practice. According to the Ministry of Finance, presumptive tax generated 16 billion Ugandan shillings during July 2024–April 2025, just 0.07% of total tax revenue. Yet experts estimate that full compliance could generate up to ten times this amount, suggesting a major shortfall. Narrowing this gap does not require new technology, but a deliberate link between the annual trading license process and the Uganda Revenue Authority (URA) tax register through a shared One-Number Tax Reference. The real challenge is whether Uganda can achieve the institutional coordination needed for genuine change.
Digital public infrastructure (DPI), including shared identifiers, interoperable databases, and digital payment rails, is often presented as a shortcut to stronger tax systems in lower-income countries.
It rarely is. DPI delivers only when interoperability, the ability of separate government systems to recognize and act on the same piece of information about the same person, is deliberately designed, implemented, and maintained. Left alone, digitization often produces parallel systems that never communicate with one another: a license here, a tax file there, both relating to the same trader, yet neither aware that the other exists.
Lessons from Uganda
Uganda’s presumptive tax regime illustrates both sides of this story: a solution hiding in plain sight, and the coordination required to make it work. Uganda has more than 300,000 licensed traders who never appear on a single URA database. Every year they walk into a District Local Government office, pay an annual trading license fee, and walk out with a valid license and no income-tax obligation ever triggered. This is, at its core, a failure of DPI: two government systems serving the same population operate in complete isolation, sharing no common identifier and no data.
UNU-WIDER’s microsimulation of URA administrative data estimates that full compliance with Uganda’s presumptive tax regime could generate 90-167 billion Ugandan shillings (about USD 240-USD 446 million) annually, representing a theoretical upper bound under full compliance rather than an immediately achievable revenue target.
More recent government statistics published in the Background to the Budget FY2025/26 indicate that presumptive tax collections reached 16 billion Ugandan shillings (about USD 4.3 million) during July 2024 to April 2025, compared with 13 billion shillings (USD 3.5 million) over the same period in the previous financial year – approximately a 22% growth year-on-year. Even so, presumptive tax still accounted for only 0.07% of total tax revenue. This implies that a large share of eligible businesses remains outside the effective reach of the tax system.
Why is there a gap and what should be done?
The reason the gap persists is structural. Every licensed trader holds a Local Government Tax Identification Number (LGTIN) on their license, while URA maintains a separate TIN for registered taxpayers. Crucially, the two systems share no data.
But the answer is not simply to ‘share the data’. What is needed is closer coordination between the two levels of government (something that enables non-compliance to be detected in the first place). At the same time, detection alone does not close the compliance gap. Awareness campaigns and taxpayer outreach, implemented alongside data-sharing, are also necessary. A data link only delivers value if it changes what an official does next, not merely what a database reveals.
That is the test the One-Number Tax Reference (ONTR) must pass. Harmonizing the LGTIN with the URA TIN at the point of license assessment is best understood as an exercise in tax DPI, not a one-off administrative patch: a shared identifier is one of DPI’s foundational building blocks, the layer that lets two otherwise separate systems recognize the same trader as the same trader.
Uganda already has a working precedent. URA’s Instant TIN interface, introduced in 2022, pulls verified data from the National Identification and Registration Authority to register new taxpayers automatically, and accounted for 35% of new registrations that year.
The lesson from that experience cuts both ways: a shared identifier can expand the tax revenue quickly, particularly among younger taxpayers, women, and people who were previously outside the formal tax system who rarely engaged URA directly before. At the same time, URA and its partners also had to commit significant staff time to cleaning the resulting data and matching it against existing records, and sector-level detail useful for enforcement remained thin. The technology did the easy part, leaving the institutions with the hard part.
Under the ONTR, URA would deploy presumptive tax field teams to District Local Governments (DLGs) offices during the annual license renewal window, itself already a fixed, predictable cycle. A joint assessment form, issued under the shared identifier, would cover both the license fee payable to the DLG and the presumptive tax liability payable to URA in a single event. Payment of the license fee would generate a provisional presumptive tax return; an SMS notification and a USSD interface, usable on any mobile network without a smartphone or data connection, would allow self-service payment. License renewal would require a Tax Clearance Certificate (TCC) confirming that the prior year’s presumptive liability had been settled, turning a license the trader already needs into the compliance gate URA has lacked.
The TCC’s usefulness need not stop at license renewal. In many tax systems, clearance certificates function as general-purpose compliance gateways rather than a single checkpoint: conditions attached to public procurement, import clearance, opening or maintaining a business bank account, access to government contracts, and other business permits. Uganda could extend the same logic well beyond the trading license, embedding tax compliance into administrative and commercial moments businesses already have reason to care about, rather than treating the TCC mainly as a punitive instrument that only bites at renewal time.
What about barriers to reform?
Even a straightforward link between DLG license records and the URA’s system needs sustained institutional commitment: cleaning and matching two datasets that were never designed to speak to each other; a written data-sharing protocol that limits what is shared to trader identity; license category and payment status; a dispute-resolution channel for traders wrongly matched or incorrectly assessed; and staff on both sides trained to manage a larger, messier register. None of this will be easy, or costless.
Exclusion risk also needs equal attention. Traders who are elderly, illiterate, or in areas of poor mobile connectivity may struggle even with a USSD interface. A phased rollout, beginning in urban districts with established DLG infrastructure, would let administrators identify and close these gaps before scaling nationally. None of this makes the reform prohibitively expensive relative to alternatives such as a new enforcement campaign, but it is a governance project that takes sustained institutional follow-through, not a technical switch that can be flipped once.
There is also a strong subnational incentive to build on. DLGs that facilitate ONTR assessments would not only strengthen presumptive tax compliance but also expand their own trading license revenue as more businesses formalize. This would transform local governments from passive bystanders into active partners in domestic revenue mobilization. Such an approach is fully aligned with Uganda’s Second Domestic Revenue Mobilisation Strategy, the URA Corporate Plan 2025-26 to 2029-30, and the Government’s Tenfold Growth Strategy.
Uganda already has most of the pieces this reform needs: a licensed trader base, a legal presumptive tax regime, and working USSD and DLG infrastructure. What is missing is the deliberate, required work of interoperability – an identifier, a data-sharing protocol, a payment mechanism, and a TCC verification layer, institutionally embedded so that renewing a license and settling a tax obligation become the same act.
Uganda’s case is not unique. Ghana’s TIN-to-national-ID integration and Ethiopia’s Fayda linkage face the same underlying test: whether interoperability is designed deliberately enough to survive contact with an existing bureaucracy, or remains, as it so often does, a promise without the implementation mechanisms to back it up.
