Finance Ministry Tables Seven Tax Bills Ahead of 2025/2026 Budget
The Ministry of Finance, Planning and Economic Development has gazetted seven Bills and presented them to Parliament ahead of the 2025/2026 Budget presentation.
These Bills propose new measures for revenue collection and management to support next financial year’s government spending.
The Bills include the Income Tax (Amendment) Bill, Excise Duty (Amendment) Bill, Value Added Tax (Amendment) Bill, Stamp Duty (Amendment) Bill, Tax Procedures Code (Amendment) Bill, External Trade (Amendment) Bill, and Hides and Skins Export (Amendment) Bill.
Promoting Local Investors
The Income Tax (Amendment) Bill 2025 proposes a three-year tax holiday for Ugandan investors with capital below 500 million shillings, effective July 2025. The goal is to encourage start-ups and help them survive the financially challenging early years.
Eligibility requires registration with investment capital not exceeding the 500 million limit, and neither the individual nor their associate should have previously benefited from the exemption. Beneficiaries must file a tax return and business information return in a format prescribed by the Commissioner General.
Bujagali Hydropower Tax Exemption
The government proposes extending the income tax exemption for the Bujagali Hydropower Project until June 30, 2032, from the current expiry in 2025. The extension is intended to help investors recoup costs and maintain affordable electricity tariffs.
Without the exemption, the cost of electricity generation could rise from 8.31 US cents (309 shillings) to 9.60 cents (357.4 shillings) per unit, potentially increasing the end-user tariff from 745.8 to 881.7 shillings.
The amendment also exempts the International Atomic Energy Agency from income tax by listing it under Schedule 1 of the Income Tax Act.
Asset Reorganization and Rollover Relief
The Bill broadens the definition of “reorganization” to include asset transfers to any person (excluding individuals), not just companies. Individuals remain excluded from rollover relief, which allows capital gains tax deferral when a business asset is replaced.
Digital Services Tax Clarification
The Bill specifies that the 5% Digital Services Tax will not apply to income earned by a non-resident from digital services provided to their associate in Uganda. However, such income remains subject to standard withholding tax.
Hides and Skins Export Duty
The Hides and Skins (Amendment) Bill introduces an export levy of 80 US cents (2,913 shillings) per 100 kg on previously exempted items such as tanned hides, cattle masks, sinews, glue-stock, and various types of skins.
Stamp Duty Amendments
The Bill proposes removing the 15,000-shilling stamp duty on agreements and mortgage deeds. It also eliminates the 0.5% duty on mortgages where collateral is involved. Interest and penalty waivers are extended to 2024, provided the principal is paid by June 2026.
VAT Amendments
The VAT (Amendment) Bill targets tax avoidance by discouraging importers from splitting shipments to stay below VAT thresholds. It also aims to regulate abuse of groupage cargo systems.
Zero-rated VAT will now include aircraft supplies, composite lanterns, raw materials for cooking stoves, and biomass pellets to promote clean energy.
Tax Procedure Code Reforms
The amendment standardizes penalties under various tax heads. Instead of fixed currency point penalties, it introduces a fine of double the tax due on goods or services. Interest and penalty on tax due by June 30, 2024, will be waived if the principal is paid by June 30, 2026.
Centralized Payment System for Gaming
Casino and betting operators will be required to process transactions through a centralized payment system licensed by the Bank of Uganda and linked to the Uganda Revenue Authority. Non-compliance attracts a penalty of double the tax due or 110 million shillings, whichever is higher.
New Tax Identification Numbers
The amendment proposes using the National Identification Number (NIN) for individuals and URSB registration numbers for entities as Tax Identification Numbers (TINs). No business license or authorization will be issued to any person or entity without a valid NIN or registration number.
Excise Duty Changes
Plastics:
A 2.5% or $70 per ton duty remains on plastic items, but exemptions are added for vacuum packaging bags used for food, beverages, and sanitary pad production.
Tobacco and Alcohol:
Excise on local soft cap cigarettes increases from 55,000 to 65,000 shillings per 1,000 sticks; imported ones double to 150,000. Hinge-lid cigarettes rise from 80,000 to 90,000 locally, and to 200,000 for imports.
Beer:
For beer with 75% local raw material content, the duty increases by 250 shillings, now 900 shillings per liter or 30%, whichever is higher. The 30% rate or 950 shillings per liter for barley beer is repealed.
Juice:
Excise remains at 10% or 250 shillings per liter, except for juice made from at least 50% locally grown EAC-region produce (up from 30%).
Fuel:
Excise on petrol rises from 1,550 to 1,650 shillings per liter, and diesel from 1,230 to 1,380.
