Uganda: Tax amendments based on 2026/2027 budget passed by Parliament
Changes include corporate income tax exemptions, increased VAT thresholds, and new withholding taxes.
The Parliament of Uganda passed several tax amendments based on the FY 2026/2027 budget, aimed at enhancing revenue collection, broadening the tax base, and improving compliance. The amendments affect various tax laws, including the Income Tax Act, Tax Procedure Code Act, Value Added Tax Act, and the Stamp Duty Act, and will be effective July 1, 2026, once signed into law by the president.
Income tax amendments
- Broadening of definition of "royalty" to include software, and increasing the tax rate from 5% to 15%
- Extension of tax exemption for the Bujagali hydropower project to June 30, 2032
- Income exemption for developers investing in tourism infrastructure
- Revision of infrastructure bond definition to include non-listed bonds
- Allowance for microfinance institutions to claim specific loan-loss provisions
- Amendments to reduce compliance burden on dormant companies within groups
- Exclusion of carried-forward losses from “tax EBITDA”
- Introduction of withholding tax on debenture interest payments to foreign lenders
- Obligation for taxpayers to prove compliance with the arm’s length principle
- Option for monthly provisional rental income tax returns for individuals
- Reintroduction of withholding tax on betting winnings at a 15% rate
- Expansion of withholding tax on commissions paid by telecom service providers
- Introduction of withholding tax on public entertainers
- Expansion of final tax to include telecom and insurance commissions
- Exemption for income of specific listed institutions
Indirect tax amendments
- VAT
- Exemption of VAT withholding for e-invoiced transactions
- Increase in VAT registration threshold from UGX 150 million to UGX 300 million
- VAT credit for developers of hotels and tourism facilities
- Revision of interest forfeiture threshold for VAT refunds
- Reduction of refund threshold for nontaxable persons using e-invoices
- Potential deferred VAT payments in the mining sector
- Update of the Second Schedule to exempt specific institutions from VAT
- Stamp and excise duty
- Introduction of monthly returns and interest for financial services providers
- Five-year document retention requirement for stamp duty
- Introduction of stamp duty on vehicle registration and transfer
- Revision of excise duty rates on various goods
Other tax amendments
- Lotteries and gaming tax: Increase in gaming tax rate from 20% to 30% of the total amount staked, less payouts
- External trade adjustments: Exemption of imports of medical supplies from the infrastructure levy and introduction of an environmental levy on worn clothing
Read a June 2026 report prepared by the KPMG member firm in Uganda