||The aim of the thesis is to analyse the conditions for foreign direct investment in three selected neighbouring countries - Uganda, Tanzania and Kenya - in terms of taxes, tax incentives and investment environment and find the answer to how it might actually influence the FDI inflows. The main focus is on investment taxation in Uganda with its development, reforms, current tax rates and tax incentives. The basic tax rates are then compared to the tax systems of Uganda´s two neighbours – Kenya and Tanzania – with the intend to find what country has the lowest tax burden. Their tax incentives overview is provided as well. Furthermore, the market evaluation and the comparative analysis of the investment climate in selected countries are carried out to answer the question, why investors should (or should not) consider investing in one of the countries. Question how these conditions actually influence the foreign direct investment is also part of the thesis.