Uganda Unveils Major Tax Reforms in 2026 Finance Bills Package
KAMPALA, Uganda — The Ugandan government has tabled a comprehensive suite of tax and trade amendment bills before Parliament, introducing sweeping changes to excise duties, income tax, value-added tax, and trade levies effective July 1, 2026.
The seven-bill package, presented by Finance Minister Matia Kasaija, aims to revise tax rates, expand withholding tax obligations, and introduce new environmental levies across multiple sectors.
Excise Duty Increases on Key Goods
Under the Excise Duty (Amendment) Bill, 2026, consumers will face higher taxes on several everyday items. Cement will attract a duty of Ushs 1,000 per 50kg, while cooking oil and cooking fat will be taxed at Ushs 400 and Ushs 500 per litre respectively. Sugar will incur Ushs 300 per kg.
Motor spirit (petrol) duties rise to Ushs 1,750 per litre, with gas oil (diesel) set at Ushs 1,430 per litre. Motorcycles will face a first registration fee of Ushs 500,000.
The bill also introduces new levies on plastics, including sacks, bags, disposable cups, and bottles, at 25% or USD 1,500 per tonne — whichever is higher. Paints and varnishes face differential rates: locally manufactured products at 3% or Ushs 50 per litre, while imported varieties attract 10% or Ushs 2,000 per litre.
Betting and Gaming Taxes Harmonised
The Lotteries and Gaming (Amendment) Bill establishes a uniform tax rate of 30% on betting and gaming activities, calculated as the total amount staked minus payouts. This provision aligns with new withholding tax rules under the Income Tax Amendment Bill, which imposes a 15% withholding tax on betting and gaming winnings.
Income Tax Overhaul
The Income Tax (Amendment) Bill introduces multiple changes affecting individuals and businesses:
New tax brackets for individuals: The tax-exempt threshold remains at Ushs 4.02 million, but a new top tier imposes an additional 10% on chargeable income exceeding Ushs 120 million — effectively creating a 40% marginal rate for high earners.
Withholding tax expansions: Telecommunications service providers must now withhold 10% on commissions for retail services, mobile network services, and mobile money services. Public entertainers face a 6% withholding tax on gross payments, while purchasers of non-business assets must withhold 6%.
Investment incentives: Developers of hotels or tourism facilities with investment capital of at least USD 10 million (foreigners) or USD 5 million (citizens) qualify for tax exemptions, provided they source at least 70% of raw materials locally and employ 70% citizens earning 70% of the total wage bill.
The Bujagali Hydro Power Project’s tax exemption has been extended to June 30, 2032.
VAT Threshold Rises to Ushs 250 Million
Small businesses receive relief as the Value Added Tax (Amendment) Bill raises the mandatory VAT registration threshold from Ushs 150 million to Ushs 250 million in annual turnover. The bill also exempts designated persons using e-invoicing from VAT withholding obligations.
Vehicle Age Limits and Environmental Levies
The Traffic and Road Safety (Amendment) Bill prohibits importation of motor vehicles exceeding 13 years from manufacture — reduced from the previous 15-year limit. Environment levies on imported vehicles increase progressively: 20% of CIF value for 9-year-old vehicles, rising to 50% for 12-year-old vehicles.
The External Trade (Amendment) Bill introduces a 30% environmental levy on worn clothing and other worn articles. However, vaccines, medicines, medical supplies, pesticides, and related products are exempted from infrastructure levy and import declaration fees.
Tax Debt Waiver and Penalty Revisions
The Tax Procedures Code (Amendment) Bill waives all tax, penal tax, and interest outstanding as of June 30, 2016. Penalties for non-use of electronic fiscal devices or failure to issue e-invoices have been revised to double the tax due or ten currency points — whichever is higher.
The Stamp Duty (Amendment) Bill raises transfer duties to 3% of total value, sets motorcycle registration at Ushs 50,000, and other motor vehicle registration at Ushs 200,000.
All amendments take effect on July 1, 2026, pending parliamentary approval.
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