IMF Wants Govt to Introduce VAT on Fuel The IMF is pushing Uganda to rethink fuel taxation, urging the introduction of VAT on petroleum products while cutting excise duty to boost revenues. The proposal aims to broaden the tax base and improve fiscal sustainability, but risks political pushback and cost-of-living pressures if poorly sequenced.

The International Monetary Fund (IMF) has urged government to introduce Value Added Tax (VAT) on fuel products as part of a broader strategy to strengthen domestic revenue mobilization and improve fiscal sustainability. In its Uganda: Post-Financing Assessment Discussions report, the IMF highlights that Uganda continues to collect less tax revenue than its potential, largely due to a narrow tax base and numerous exemptions in the current tax regime, stressing that broadening the tax base is essential to close gaps in revenue relative to regional peers. Under existing law, fuel and petroleum products are VAT exempt. But instead, government currently charges…