Uganda is entering a critical phase in its fiscal policy evolution, with the ministry of Finance proposing a set of sweeping tax reforms designed to boost revenue, stimulate entrepreneurship, and streamline compliance.
The 2025 tax amendment bills offer a broad range of changes that target inefficiencies, close loopholes, and offer targeted incentives. From closing VAT fragmentation tactics used by importers to extending tax holidays for strategic infrastructure projects, the proposals reflect a government keen to balance short-term revenue needs with long-term economic development.
One of the most ambitious measures is the introduction of a three-year income tax exemption for startups owned by Ugandan citizens—a move that could invigorate local entrepreneurship and job creation.
Other highlights include proposed excise duty relief for businesses dealing in expired or damaged goods, a central payment gateway to address leakages in the gaming industry, and a simplification of the taxpayer registration process using national identification numbers.
Meanwhile, the exemption of stamp duty on mortgage and collateral instruments aims to enhance credit access for individuals and businesses alike. While these proposals are not yet law, their implications are wide-reaching.
If passed by parliament, they could mark a turning point in how Uganda collects taxes, fosters innovation, and supports compliance. As businesses, investors and professionals watch closely, proactive adaptation and engagement will be essential to maximizing the benefits— and mitigating the challenges—of this next chapter in Uganda’s tax policy.
LEGISLATIVE PATH
Uganda’s ministry of Finance, Planning and Economic Development (MoFPED) has released a new set of proposed tax amendments for the 2025/26 financial year, aimed at enhancing domestic revenue mobilization, addressing inefficiencies in tax administration, and aligning tax policy with the country’s broader development agenda.
These bills, published on March 25, 2025, under Bills Supplement No.05, include the Income Tax (Amendment) Bill, the Value Added Tax (Amendment) Bill, the Excise Duty (Amendment) Bill, the Tax Procedures Code (Amendment) Bill, and the Stamp Duty (Amendment) Bill.
Tax bills in Uganda follow a structured legislative path. MoFPED drafts the proposals and submits them to parliament, where they are reviewed by the parliamentary committee on Finance, Planning and Economic Development.
The bills are then debated in the House and, if passed, forwarded to the president for assent. Throughout this process, stakeholders such as the Uganda Revenue Authority (URA), business associations, tax professionals and the public participate through consultations, public hearings and policy advocacy.
This participatory approach is critical in shaping tax policy to reflect both the government’s revenue needs and the private sector’s concerns. Although these bills are still under consideration and have not yet become law, they are likely to significantly impact the business environment and individual taxpayers if enacted.
Stakeholders, particularly in the private sector, are advised to study the proposed changes closely in order to adjust compliance strategies, reassess financial planning, and explore new opportunities.
One of the most consequential proposals is the Value Added Tax (Amendment) Bill, 2025, which seeks to revise the VAT Act Cap 344. Under the current framework, importers are able to avoid mandatory VAT registration by splitting their goods into separate consignments.
This fragmentation enables them to stay below the registration threshold, effectively bypassing VAT obligations. In addition, the application of VAT exemptions and zero-rating is limited to specific sectors such as agriculture, education and healthcare. The proposed amendment addresses this loophole by introducing an anti-fragmentation provision.
This new rule requires importers to aggregate the value of all their consignments when determining whether they meet the VAT registration threshold. The change is expected to broaden the VAT base and enhance compliance among businesses that previously exploited this gap.
The amendment also includes progressive tax measures aimed at encouraging sustainability and supporting critical sectors. VAT exemptions are proposed for biomass pellets and solar lanterns, aligning with Uganda’s commitment to renewable energy and environmental conservation.
Furthermore, the bill proposes zero-rating supplies related to aircraft operations, which could reduce costs for aviation companies and stimulate growth in the sector. If the bill is passed, importers will have to revise their importation strategies and customs documentation to reflect the new aggregation rule.
Renewable energy providers are likely to experience increased demand as VAT exemptions reduce end-user costs, making solar and biomass products more accessible to low-income households and rural communities. In the aviation sector, reduced VAT burdens could result in lower operational costs, potentially translating into more competitive airfares and broader access to air transport.
As these proposed tax reforms make their way through the legislative process, it is important for businesses, policy analysts, and civil society to remain engaged. Under the Income Tax (Amendment) (No. 2) Bill, 2025, the government seeks to introduce a three-year tax exemption for startups established by Ugandan citizens.
This proposal represents a shift in support for homegrown innovation and entrepreneurship. The current law imposes a 30% corporate income tax on all businesses, with limited exemptions granted to strategic industries or specific projects like the Bujagali Hydro Power Project.
However, if the proposed exemption is enacted, startups will have greater flexibility to reinvest profits into their operations during their formative years—encouraging both economic diversification and job creation.
The bill also proposes an extension of the tax exemption for the Bujagali Hydro Power Project until 2032, a move aimed at maintaining affordable electricity prices and supporting ongoing industrialization efforts.
Additionally, the International Atomic Energy Agency (IAEA) is set to be included on the list of tax-exempt institutions. This change will require professionals and entities dealing with the IAEA to account for its new exemption status in their compliance planning. In the Tax Procedures Code (Amendment) Bill, 2025, a series of reforms are proposed to streamline registration and enforcement processes.
Under current law, taxpayers must apply separately for a Tax Identification Number (TIN), which has posed an administrative burden. The proposed bill aims to simplify this by allowing the use of National Identification Numbers (NINs) and Business Registration Numbers (BRNs) as TINs.
This integration is expected to reduce registration delays and encourage broader compliance. The bill also introduces a centralized payment gateway for gaming and betting companies, which currently report taxes independently. This change is designed to curb revenue leakages in the gaming sector and ensure better oversight.
Furthermore, the bill includes a time-bound waiver on interest and penalties for tax liabilities outstanding up to June 2026. The waiver is expected to incentivize voluntary disclosure and settlement of past tax obligations without punitive consequences.
The Stamp Duty (Amendment) Bill, 2025 proposes eliminating stamp duty on mortgage deeds, agreements, and collateral securities. Under existing law, such instruments attract stamp duty, often increasing the overall cost of securing financing. The proposed exemption is intended to reduce transaction costs for businesses and individuals alike.
This move could also lead to greater access to credit, as borrowers will face fewer barriers when formalizing financial agreements. Under the Excise Duty (Amendment) (No. 2) Bill, 2025, the government is addressing a long-standing concern among businesses: the application of excise duty on expired, damaged, or obsolete goods.
The proposed amendment allows businesses to apply for excise duty remission on such goods, providing relief from unnecessary tax burdens and encouraging more efficient inventory management. The bill also proposes revisions to excise duty rates under Schedule 2 of the Excise Duty Act, which may affect pricing for selected consumer goods.
The collective impact of these tax amendment bills, if enacted, will be substantial. The reforms signal the government’s commitment to broadening the tax base, promoting business growth, and encouraging tax compliance. For businesses and individuals, this means both new opportunities and new responsibilities.
Entrepreneurs will benefit from startup tax incentives, while other sectors—such as energy, gaming, and aviation—must reassess their operations in line with the new provisions. As Parliament deliberates these proposals, stakeholders are urged to monitor developments closely.
Businesses should begin evaluating the potential operational and financial implications of each amendment. Taxpayers with outstanding liabilities are encouraged to prepare for the waiver period and take advantage of this window to regularize their tax affairs. Professionals should also consider engaging with tax authorities to clarify interpretations and implementation timelines.
Ultimately, these amendments represent a strategic evolution in Uganda’s tax framework. With careful planning and proactive compliance, individuals and businesses can position themselves to take full advantage of the emerging landscape.
Continuous engagement with policymakers and tax experts will be key in ensuring that the evolving system is both equitable and conducive to sustained economic growth.