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An assessment of presumptive tax in Uganda: Evaluating the 2020 reform and four alternative reform scenarios using UGAMOD, a tax-benefit microsimulation model for Uganda

Author

Listed:
  • Ronald Waiswa
  • Jesse Lastunen
  • Gemma Wright
  • Michael Noble
  • Joseph Okello Ayo
  • Milly Isingoma Nalukwago
  • Tina Kaidu Barugahara
  • Susan Kavuma
  • Isaac Arinaitwe
  • Martin Mwesigye
  • Wilson Asiimwe
  • Pia Rattenhuber

Abstract

Presumptive tax, a final tax on business income, was introduced in Uganda in 1997. The latest reform to the regime in July 2020 sought to make the system more progressive, simpler, and fairer to small firms. In this work, we evaluate the reform, focusing on its revenue implications based on simulations using UGAMOD, a tax-benefit microsimulation model for Uganda. Our findings suggest that, assuming full compliance, the reform reduces tax revenue potential by between 48-72 per cent from the previous rules.

Suggested Citation

  • Ronald Waiswa & Jesse Lastunen & Gemma Wright & Michael Noble & Joseph Okello Ayo & Milly Isingoma Nalukwago & Tina Kaidu Barugahara & Susan Kavuma & Isaac Arinaitwe & Martin Mwesigye & Wilson Asiimwe, 2021. "An assessment of presumptive tax in Uganda: Evaluating the 2020 reform and four alternative reform scenarios using UGAMOD, a tax-benefit microsimulation model for Uganda," WIDER Working Paper Series wp-2021-163, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-2021-163
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    References listed on IDEAS

    as
    1. Waiswa, Ronald & Akol, Doris & Nalukwago Isingoma, Milly, 2020. "Who can make Ugandan Taxpayers more Compliant?," Working Papers 15555, Institute of Development Studies, International Centre for Tax and Development.
    2. Michael Carlos Best & Anne Brockmeyer & Henrik Jacobsen Kleven & Johannes Spinnewijn & Mazhar Waseem, 2015. "Production versus Revenue Efficiency with Limited Tax Capacity: Theory and Evidence from Pakistan," Journal of Political Economy, University of Chicago Press, vol. 123(6), pages 1311-1355.
    3. Jesse Lastunen & Pia Rattenhuber & Kwabena Adu-Ababio & Katrin Gasior & Xavier Jara & Maria Jouste & David McLennan & Enrico Nichelatti & Rodrigo Oliveira & Jukka Pirttilä & Matteo Richiardi & Gemma W, 2021. "The mitigating role of tax and benefit rescue packages for poverty and inequality in Africa amid the COVID-19 pandemic," WIDER Working Paper Series wp-2021-148, World Institute for Development Economic Research (UNU-WIDER).
    4. Maria Jouste & Milly Isingoma Nalukwago & Ronald Waiswa, 2021. "Do tax administrative interventions targeted at small businesses improve tax compliance and revenue collection?: Evidence from Ugandan administrative tax data," WIDER Working Paper Series wp-2021-17, World Institute for Development Economic Research (UNU-WIDER).
    5. Paul Johnson & Gareth Myles, 2011. "The Mirrlees Review," Fiscal Studies, Institute for Fiscal Studies, vol. 32(3), pages 319-329, September.
    6. Kleven, Henrik & Best, Michael & Spinnewijn, Johannes & Waseem, Mazhar & Brockmeyer, Anne, 2013. "Production vs Revenue Efficiency With Limited Tax Capacity: Theory and Evidence From Pakistan," CEPR Discussion Papers 9717, C.E.P.R. Discussion Papers.
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    More about this item

    Keywords

    presumptive tax; Tax administration; Small business; Tax compliance; Impact evaluation; Microsimulation modelling;
    All these keywords.

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