Uganda

Amendments for the Financial Year 2026/27

Income tax

The following tax changes are contained in the 2026 Income Tax Amendment Act:

• Expansion of the definition of "royalty" to include "software".This means that payments made by residents for the use or right to use
  software will constitute royalties and will attract a withholding tax at a rate of 15% where a payment is made to a non resident (subject to the application of a Double Taxation Agreement) and 6% on payments made to resident persons not exempted from WHT.
• Tax exemption for developers of hotels and other ultra-luxury tourism facilities investing at least USD 10 million for foreign investors, and USD 5 million for Ugandan investors.
• Amendment to broaden the definition of an "infrastructure bond" to include all bonds, notes or other similar securities used to raise funds for
  public infrastructure and other social services, if those bonds have a maturity period of at least ten years.” The amendment includes both listed and unlisted
  securities.
• Amendment to section 25 of the Income Tax Act related to interest deduction for a member of a Group as follows:
  • To redefine a "group" to mean persons other than individuals with at least 51% interest of common underlying ownership;
  • To redefine a "group" to exclude dormant entities. This implies that an entity will not be considered to fall within a group if other members of that group are all dormant entities.
  • To exclude brought forward losses in the tax earnings before interest, tax, depreciation and amortisation (EBITDA) calculation in determination of deductible interest for income tax purposes.
• Extension of the income tax exemption for Bujagali Energy Limited until 2032 to support affordable electricity tariffs.

• Introduction of a 5% WHT on interest paid by a resident company to a non resident financial institution of a public character. Initially this nature of interest was exempt from tax.

• Inclusion of micro finance deposit taking or tier 4 institutions under the provision that allows for the deductibility of certain categories of bad debts incurred by financial institutions.

• Amendment of the income tax rates applicable to resident individuals as follows:

  • A resident individual earning a monthly gross pay of not more than UGX 335,000 (UGX 4,020,000 per year) will be exempt from PAYE;

  • The Act eliminates the 10% individual rate as individuals previously under this category will now be exempt from PAYE. The Act has introduced  a 25% PAYE rate for individuals earning above UGX 410,000 up to UGX 485,000;

  • The 30% band is  applicable to individuals earning a monthly gross pay of UGX 485,000 – UGX 10,000,000. Previously, the 30% band used to kick in at UGX 410,000;

  • There will be a net monthly saving between UGX 10,000 and UGX 13,750 depending on the resident individual’s gross employment income.

• Introduction of a provision for individuals to file and pay rental income tax monthly.
• Amendment to include tax withheld on commissions paid to an insurance agent and commissions for telecommunication retail services, mobile network services or mobile money services as a final tax. This implies that such payments will not be subject to any additional tax.
• Introduction of a 6% WHT on a gross payment made to a resident public entertainer by any person (whether designated as a withholding agent or not).
• Introduction of a 15% WHT on gross payments for winnings from betting and gaming, Initially the 15% WHT applied on only winnings from betting excluding gaming.
• Extension of withholding tax at 10% to apply on commissions paid by  telecommunication service providers to all telecommunication retail services and mobile network services. Initially this rate applied to commissions paid for airtime distribution or mobile money services.

Value-added tax (VAT)

 The following tax changes are contained in the 2026 VAT Amendment Act:

• Increase in the annual VAT registration threshold from UGX 150 million to UGX 300 million. This would also increase the quarterly registration trigger from UGX 37.5 million to UGX 75 million.
• Introduction of an exemption to a designated person from VAT withholding on payments where a designated person pays for taxable supplies and receives an e-invoice or ereceipt.
• Introduction of a new input tax credit for Hotel and Tourism facility developers with a minimum investment threshold of USD 10 million for a foreigner and USD 5 million for citizens.
• Extending VAT deferment to Plant and Machinery and inputs for the mining sector. This intended to ease liquidity pressures, supporting the Government’s mineral development agenda under the ATMS framework and the tenfold growth strategy.
• Revision to the threshold above which a taxpayer will not be entitled to interest on a delayed refund by the URA, where the refundable amount ultimately exceeds the amount originally applied for.The amendment replaces the fixed monetary threshold with a proportional test, such that the threshold is set at 5% of the total refund amount claimed.
• Inclusion of the Arab Bank for Economic Development in Africa (BADEA) and Austrian Development Agency (ADA) on the list of Public International Organisations.
• Extension of the existing VAT exemption under Schedule 3 of the VAT Act for goods and services supplied to contractors and subcontractors of hydro -electric power, solar, geothermal, bio-gas,and wind energy projects to also cover nuclear energy projects. Initially the exemption did not include nuclear energy.

Excise duty

The following excise duty changes are contained in the Excise Duty (Amendment) Act, 2026:

• Revision of the excise duty rates on certain goods and services under Schedule 2 of the Act, such as:
  • Increase in the rate on Motor spirit (gasoline) from UGX 1,550 per litre to UGX 1,750 per litre;
  • Increase in the rate on cement, adhesives, gout, white cement or lime from UGX 500 per 50kg to UGX 750 per 50kg;
  • Increase in the rate on cooking oil from UGX 200 per litre to UGX 400 per litre;
  • Increase in the rate on Motorcycles (at first registration) from UGX 200,000 to UGX 500,000.

Stamp duty

The following stamp duty changes are contained in the Stamp Duty (Amendment) Act, 2026:

Introduction of a requirement for persons carrying on the business of financial services to file monthly stamp duty returns. The failure to file this return will attract a penalty computed as 2% (simple interest) of the duty payable for every month the return remains outstanding.

Introduction of a requirement to retain documents or records for a period of at least five years from the date the document was generated. This aligns with section 15(1)(c) of the Tax Procedures Code Act which provides for a period of five after the end of the tax period within which a taxpayer is required to retain a document or record.

Introduction of stamp duty on the first registration and transfer of all automobiles as follows:

• motorcycle, tricycle or quadricycle – UGX 30,000;
• any other motor vehicle – UGX 200,000.

Tax administration

The following tax changes are contained in the Tax Procedures Code (Amendment) Act, 2026:

• Introduction of a waiver of any tax including penal tax and interest owed by a taxpayer as at 30 June 2016 and is outstanding as at 1 July 2026. This means that any tax arising before 30 June 2016 will be waived.
• Extension of the waiver of interest and penalties outstanding from 30 June 2024 to 30 June 2025 provided the principal tax is fully or partially paid by 30 June 2027. Where a partial payment of principal tax is made, the waiver will be pro-rated.
• Reduction of the fixed penalty for possession of goods not affixed with a digital tax stamp from UGX 50,000,000 to UGX2,000,000 or double the tax due on goods and services whichever is higher.
• Introduction of new penal tax of UGX 200,000 or double the tax due on goods and services, whichever is higher, for taxpayers required to use an electronic fiscal device. Similar penalties will arise where a taxpayer does not issue an e-receipt or e-invoice for goods or services or who tampers with an electronic fiscal device.

Amendments to the External Trade Amendment Act 2026

The following tax changes are contained in the above amendment Act:

• Exemption of imported vaccines, medicines, medical supplies, pesticides, rodenticides, acaricides, and insecticides from both the 1% import declaration fee and the 1.5% infrastructure levy.
• Introduction of an environmental levy of 30% on the Cost, Insurance and Freight (CIF) value of worn clothing and other worn
  articles.

Amendments for the Financial Year 2025/26

Income tax

The following tax changes are contained in the 2025 Income Tax Amendment Act:

• Introduction of an income tax exemption for businesses established by citizens after 1 July 2025 for a period of three years, subject to the following criteria:
  • The business should be registered with an investment capital not exceeding 500 million Ugandan shillings (UGX).
  • The citizen or their associate should not have previously benefited from the exemption.
  • The citizen will be required to file a tax return as well as a business information return in the format that will be prescribed by the Commissioner General.
• Amendment to broaden the definition of reorganisation for rollover relief to mean "transaction in which a person transfers their assets to another person, other than an individual controlled by the transferor or the shareholders, following which the stock of the transferee is distributed". The intention is to exempt transactions where an individual transfers assets to a company that is under their control from taxation of capital gains.
• Clarification that the 5% digital services tax (DST) will not apply on income derived by a non-resident from providing digital services to its associate in Uganda. However, such income will be subjected to the normal withholding tax (WHT) applicable on non-resident payments.
• The list of listed institutions exempt from income tax was expanded to add the International Atomic Energy Agency (IAEA).

Value-added tax (VAT)

The following tax changes are contained in the 2025 VAT Amendment Act:

• Expansion of the scope of activities that fall within the scope of schemes that taxpayers use to obtain undue tax benefits to include imports of goods under separate consignments, which if aggregated would qualify the importer to be registered under the VAT Act.
• The list of Public International Organisations (entitled to certain VAT reliefs) is expanded to include the United Nations related agencies and specialised agencies.
• The list of exempt supplies in the Third Schedule of the VAT Act was modified to add/remove the following items:
  
  • Replacing the exemption of the supply of composite lanterns with the supply of solar lanterns.
  • Expanding the exemption of the supply of wet processing operations, textile machinery spare parts to include industrial consumables for textile production, textile manufacturing machinery and equipment.
  • Removing the supply of billets from the VAT exemption list.
  • Include the supply of biomass pellets as an exempt supply.
• The list of zero-rated supplies in the Fourth Schedule of the VAT Act was expanded to include the supply of aircraft.

Excise duty

The following excise duty changes are contained in the Excise Duty (Amendment) Act, 2025:

• Introduction of a mechanism for remission of duty paid on ex-factory goods under the Excise Duty Act, subject to certain conditions, such as proof that the duty was paid on damaged and expired goods, goods delivery documentation, report indicating the extent and cause of the damage issued by a competent authority, etc.
• Revision of the excise duty rates on certain goods and services under Schedule 2 of the Act, such as:
  • Increase in the rate on cigarettes: Soft cap (locally manufactured and imported) from UGX 55,000 and UGX 75,000 per 1,000 sticks, respectively, to UGX 65,000 and UGX 150,000 per 1,000 sticks, respectively.
  • Increase in the rate on beer whose local raw material content, excluding water, is at least 75% from 30% or UGX 650 per litre, whichever is higher, to 30% or UGX 900 per litre, whichever is higher.

Stamp duty

The following stamp duty changes are contained in the Stamp Duty (Amendment) Act, 2025:

• Introducing a nil stamp duty on any agreement or memorandum of an agreement and on a mortgage deed. This is intended to lower the financial burden on businesses and individuals.

Tax administration

The following tax changes are contained in the Tax Procedures Code (Amendment) Act, 2025:

• Increase in the tax amnesty period for the waiver of interest and penalties outstanding as at 30 June 2024 if principal tax is paid by 30 June 2026. Partial payment of principal tax will result in a pro-rata waiver of penalties and interest. This is intended to encourage compliance and provide relief to businesses.
• Replacement of Tax Identification Numbers (TINs) with the following: 
  • National Identification Numbers (NINs) for individuals as issued by the National Identification Registration Authority (NIRA).
  • Registration numbers issued by Uganda Registration Services Bureau in case of a person who is a non-individuals.
  • A tax identification number issued by a foreign tax authority with whom Uganda has a tax treaty or agreement for exchange of information.
• Reduction of the penalty from UGX 6 million per invoice to twice the tax owed by a taxpayer for non-compliance with the Electronic Fiscal Receipting and Invoicing System (EFRIS).
• Introduction of a requirement for casino, gaming, or betting operators to conduct transactions through a centralised payment gateway system licensed
  by the Bank of Uganda and linked to the Uganda Revenue Authority electronic notice system.
• Introduction of a requirement for entities granted tax exemptions to continuously meet the relevant exemption criteria. A taxpayer who fails to comply shall be liable to pay the tax due for the period for which the taxpayer fails to maintain such requirements.

Amendments to the External Trade Amendment Act 2025

• Introduction of 1% import declaration levy and 1.5% infrastructure levy on the customs value of all goods imported into the country for home use, with the exception of the following:
  • Goods listed in the fifth schedule of the East African Community Customs Management Act (EACCMA) that are exempted from payment of customs duty.
  • Plant and machinery as prescribed under chapter 84 and 85 of the EACCMA.
  • Goods under a special operating framework with the government of Uganda (special projects executed on behalf of the government with national interest).
• Introduction of export levy of USD 10 per metric tonne on wheat bran, cotton cake, and maize bran.