Economic environment

Over the past two decades, Uganda established a strong record of prudent macroeconomic management and structural reforms. It was one of the first Sub-Saharan African countries to embark on liberalization and pro-market policies in the late 1980s. The government has maintained a stable macroeconomic environment and sustained private sector-oriented reforms that graduated Uganda into a mature reformer in 2006. GDP growth accelerated from an average of 6.5 percent per year in the 1990s to over 7 percent during the 2000s.

Growth remained well above the Sub-Saharan Africa average in the face of consecutive exogenous shocks, including the secondary effects of the global economic crisis, bad weather and surges in international commodity prices. However, due to rapid population growth, real GDP growth per capita has averaged only around 4 percent over the past 2 decades.

Inflation
The country’s headline inflation started soaring in the middle of 2011 touching 30.4% in October 2011 prompting tight monetary policy by the Bank of Uganda to curb the situation. It has since seen a steady decline. Bank of Uganda raised the central bank rate (CBR) from 13% in July last year to 23% in October in response to high inflation rates. The commercial banks also responded by increasing the lending rates. However, with the steady decline in headline inflation, the CBR rate has gradually been reduced and it now stands at 19%.

Taxation

Tax Regime
After the collapse of the East African Community, the Ministry of Finance took over the Income Tax Department in 1974; followed by the Customs Department in 1977. In 1991, the function of administering Central government taxes was shifted from the Ministry of Finance to the Uganda Revenue Authority, a body corporate established by an Act of Parliament. Therefore, the Uganda Revenue Authority Act Cap 196 was put in place to provide the administrative framework in which taxes under various Acts are collected.

Double taxation treaties

Uganda Government in pursuit of its goal of attracting foreign private investment to Uganda has concluded the following double taxation agreements with other countries.
• United Kingdom,
• Denmark, Norway,
• South Africa,
• India,
• Netherlands,
• Mauritius,
• Italy and
• Belgium.
The above agreements have been concluded with the major aim of avoiding Double Taxation and fiscal evasion between the partner states. Negotiations for more double taxation agreements with a number of other countries are ongoing.