Uganda

Foreign tax credit

A resident taxpayer is entitled to a foreign tax credit for any foreign income tax paid by the taxpayer in respect of foreign-source income included in the gross income of the taxpayer. The foreign tax credit allowed is subject to the income tax rate (i.e. 30%) in Uganda.

Tax holidays for exporters

A tax holiday of ten years is available to exporters who export at least 80% of their produce of finished goods, subject to certain conditions.

Scientific research expenditure, training expenditure, and mineral exploration expenditure

A 100% allowance is available for scientific research expenditure, training expenditure, and mineral exploration expenditure in the year of expenditure.

Incentives for the importation of plant and machinery

Plant and machinery is exempt from customs duty on importation. Additionally, a VAT deferral facility is available where VAT is deferred on importation of plant and machinery and subsequently waived upon approval by the relevant authorities.

Employment incentives

A deduction of 2% of income tax payable is granted to any employer who can prove to the URA that at least 5% of their employees on a full-time basis are people with disabilities.

Other incentives

• Certain income and bodies are exempt from tax. These include income derived from agro processing and from exportation of consumer and capital goods (subject to certain conditions), the income of Bujagali Hydro Power Project up to 30 June 2024, the income of a savings and credit co-operative society up to 30 June 2027, the income of bodies established by law for the purpose of regulating the conduct of professionals, such as the Uganda Law Society and Institute of Certified Public Accountants, and employment income of a prosecutor in the Office of the Directorate of Public Prosecution.
• There is a ten-year income tax exemption for developers and operators in an industrial park or free zone. The exemption applies to income derived by a person from letting or leasing facilities whose minimum capital investment is USD 50 million for foreigners or USD 10 million in the case of a citizen.
• The income of an operator in an industrial park or free zone or the income of any other person carrying on business outside the industrial park or free zone whose investment capital over a period of ten years is at least USD 10 million in the case of a foreigner or USD 300,000 in the case of a citizen, or USD 150,000 in the case of a citizen whose investment is placed up country, is exempt from tax. The exemption is limited to the following activities:
  • Processing of agricultural goods.
  • Manufacture or assembly medical appliances, medical sundries or pharmaceuticals, building materials, automobiles, household appliances.
  • Manufacture of furniture, pulp, paper, printing and publishing of instructional materials.
  • Vocational or technical institutes.
  • Logistics and warehousing, information technology, or commercial farming.
  • Manufacture of tyres, footwear, mattresses, or toothpaste.
  • Manufacture of chemicals for agricultural use, industrial use, textiles, glassware, leather products, industrial machinery, electrical equipment, sanitary pads, and for diapers.

  To qualify as an operator in an industrial park or free zone or as any other person carrying on business outside the industrial park or free zone, the taxpayer must locally source 75% of raw materials subject to availability, and the person should also employ at least 75% citizens who earn an aggregate wage of at least 75% of the total wage bill.

• Under the 2024 Income Tax Amendment Act, the following additional incomes are exempt from tax:
  • Income derived by or from a private equity or venture capital fund regulated under the Capital Markets Authority Act.
  • Income from the disposal of government securities on the secondary market.
  • Income earned by strategic investors manufacturing electric vehicles, batteries, charging equipment, and fabricators of electric vehicle bodies.
  • Income earned by an operator of a specialised hospital facility.