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Did Uganda's corporate tax incentives benefit the Ugandan economy or only the firms?

Author

Listed:
  • Nicholas Musoke
  • Tereza Palanská
  • Caroline Schimanski

Abstract

Uganda has one of the lowest corporate income tax collection rates in sub-Saharan Africa, while offering generous corporate tax incentives. It is unclear whether tax incentives achieve their objectives without primarily benefiting firms, potentially undermining domestic revenue mobilization and encouraging tax avoidance. Using Uganda's administrative tax data for 2014-21 and a new tax incentive dataset, this study shows that tax holidays and the reintroduction of investment allowances are associated with a significant increase in investment and mostly with higher workforce-related expenses.

Suggested Citation

  • Nicholas Musoke & Tereza Palanská & Caroline Schimanski, 2023. "Did Uganda's corporate tax incentives benefit the Ugandan economy or only the firms?," WIDER Working Paper Series wp-2023-133, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-2023-133
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    References listed on IDEAS

    as
    1. Ohrn, Eric, 2019. "The effect of tax incentives on U.S. manufacturing: Evidence from state accelerated depreciation policies," Journal of Public Economics, Elsevier, vol. 180(C).
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    More about this item

    Keywords

    Corporate tax; Tax incentive; Domestic revenue mobilization; Administrative data; Tax data; Developing countries; Tax avoidance;
    All these keywords.

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