Strengthening fiscal transparency: tax expenditure reporting in Rwanda and Uganda

Summary

Policymakers in low- and middle-income countries (L&MICs) are increasingly interested in estimating the revenues that they forego through tax incentives, exemptions, and other preferential tax measures —collectively known as tax expenditures (TEs). TE reporting primarily involves the quantification of spending that occurs through the tax system, but the regular production and publication of TE reports can stimulate dialogue about the targeting and effectiveness of policies, and support evidence-based reform.

Over recent years, the Governments of Rwanda and Uganda have worked to institutionalise TE reporting, with TaxDev providing long-term technical and analytical support. Both governments now consistently publish annual TE reports, and link the findings to budget and policy reform discussions. Routine publication has increased transparency and prompted more substantive debate about the rationale, design, and governance of tax incentives, laying the foundation for future reforms.

The policy challenge

Stagnating revenues and high debt burdens have increased pressure on policymakers to identify new sources of revenue. While there may be legitimate policy reasons for TEs, a lack of credible estimates of their costs can limit scrutiny and accountability, and risks entrenching poorly-targeted and inefficient provisions. International organisations have reinforced this agenda: the IMF and World Bank routinely emphasise effective TE governance, and Addis Tax Initiative members commit to regular publication of tax expenditures. In the context of the OECD/Inclusive Framework's Pillar II GloBe rules, many governments are also reviewing the design of their tax incentive regimes. Incentives that push a firm's effective tax rate below the new 15% minimum may no longer reduce what the firm pays overall — with the revenues potentially collected through a top-up tax by another jurisdiction.

The impact

When collaborative work began in Rwanda in 2018, the government was developing its first TE report. TaxDev's embedded Adviser initially supported MINECOFIN's Tax Policy Directorate and the Rwanda Revenue Authority to tailor an existing IMF model, build analytical workflows, and interpret results for policy audiences. Each year, government analysts expanded their role — increasingly running the model, interrogating outputs, and drafting the final report — while TaxDev shifted towards peer review quality assurance, and modelling improvements. In 2026, the Government of Rwanda published its eighth TE report, and the team is increasingly sharing lessons learned and approaches with analysts from neighbouring countries.

In Uganda, the Ministry of Finance, Planning and Economic Development (MoFPED) introduced TE reporting as part of its Domestic Revenue Mobilisation Strategy (DRMS). Building on MoFPED’s initial technical discussions with the World Bank on the benchmark tax system, TaxDev supported the Ministry to establish a reporting process and build modelling capability. The first report was produced in 2020, establishing a precedent for an annual reporting process, and in 2022-2023 MoFPED started publishing its TE reports on its website. The Cabinet subsequently adopted a TE governance framework committing to annual estimates and deeper analysis of effectiveness.

In April 2025, MoFPED and the Uganda Revenue Authority published the most recent TE report, covering FY 2023/24, estimating revenue foregone at UGX 3,609 billion (1.78% of GDP). The report was produced by a team of more than ten government officials, with TaxDev providing limited targeted support and quality assurance. TE manuals, Excel-based estimation tools, Stata code, and practical guidance have strengthened sustainability, alongside regional workshops to share learning with partner governments and the ATI.

Lessons and next steps

Several lessons have emerged in the process of institutionalising and embedding TE reporting in Rwanda and Uganda, documented more fully here and here, and summarised below:

• Start simple and build depth and coverage gradually. Governments gain traction faster when they begin with an accessible model and limited tax types, expanding complexity over time. This supports early publication and iterative skill development.
• Institutional ownership matters. Ministries of Finance should define the benchmark tax system and lead communication of findings. Clear ownership builds credibility and sustainability.
• Plan for sufficient staff time and resources. Annual reporting requires sustained analyst time and management attention, which can be underestimated at the outset.
• Embed analysis in real policy questions and document methods transparently. Reliable administrative data, clear documentation of methods and assumptions, and quality assurance all build confidence in the findings.
• Tailor training to different roles. It is more practical to build a baseline understanding across teams and develop specialisms based on specific responsibilities, rather than seeking uniform expertise. Well-documented code and manuals and refresher training help manage the risks of staff turnover, although additional support might be required to fill gaps.
• Invest in communication. Clear summaries, consistent definitions, and well-designed tables and charts help decision-makers and the public engage constructively with findings.
• Coordinate partner support and align with international standards. There is no single correct approach to TE analysis, and ensuring coordination amongst different development partners can increase coherence and reduces the risk of duplication. Aligning with ATI commitments and indices such as Global Tax Expenditures Transparency Index (GTETI) can also help policymakers to compare their systems with other countries.

Going forward, both governments plan to deepen analysis and link reporting more directly to policy decisions. TaxDev will continue supporting peer-to-peer exchange and regional learning, and integrate lessons from this work into the Coalition on Tax Expenditure Reform (COATE), launched at the UN’s 4th International Conference on Financing for Development in July 2025.