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Tax bills are legislative proposals that outline changes in a country’s tax structure. In Uganda, these bills are drafted by the Ministry of Finance, Planning, and Economic Development (MoFPED) and presented to Parliament for approval.
The process involves consultation with various stakeholders, including the Uganda Revenue Authority (URA), business communities, and tax professionals. The public plays a crucial role through debates, feedback, and advocacy before the bills are enacted into law.
Tax bills always aims at increasing domestic revenue collection, closing loopholes in tax administration, and aligning tax policies with the country’s economic development agenda.
The process of enacting tax bills in Uganda follows a structured path: MoFPED drafts the bills and submits them to Parliament, where they undergo scrutiny by the Parliamentary Committee on Finance, Planning, and Economic Development.
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The bills are debated and, if approved, sent to the President for assent. Public participation is essential in shaping these tax laws, as stakeholders provide input through public hearings and memoranda.
These bills were issued on the 25th March 2025 under bills supplement No.05. These include; - the Income Tax (Amendment) Bill, 2025, Value Added Tax (Amendment) Bill, 2025, Excise Duty (Amendment) Bill, 2025, Tax Procedures Code (Amendment) Bill, 2025, and Stamp Duty (Amendment) Bill, 2025.
As of now, these tax proposals remain bills, and their effects will only be realized once they are passed into law. Upon being passed, they will have significant implications for businesses, individuals, and Uganda’s overall economic landscape.
Understanding these proposed amendments is essential for individuals and businesses to anticipate changes, align strategies, and leverage potential benefits. This analysis provides a comparative look at the current legal framework and the proposed amendments, outlining their potential future implications if enacted.
Value Added Tax (Amendment) Bill, 2025 under the VAT Act Cap 344
Current law: Under the existing VAT Act, importers dealing with goods in separate consignments may avoid VAT registration thresholds by fragmenting their imports. Additionally, VAT exemptions and zero ratings are applied selectively, primarily to agricultural inputs, education services, and medical supplies.
Proposed amendments: The bill introduces an anti-fragmentation rule, requiring importers to aggregate separate consignments when determining VAT registration thresholds. This is intended to close loopholes that some businesses use to avoid VAT registration.
The bill also proposes VAT exemptions on biomass pellets and solar lanterns, and a zero-rating for supplies related to aircraft operations.
Implications If Passed:
Importers will need to reassess their import strategies to ensure compliance with the new aggregation rule.
Renewable energy businesses may see increased demand due to VAT exemptions, encouraging a shift toward sustainable energy.
Airlines and aviation-related businesses will benefit from reduced costs due to zero-rated aircraft supplies, potentially leading to lower ticket prices and improved sector growth
Income Tax (Amendment) (No. 2) Bill, 2025, under the Income Tax Act, Cap. 338
Current law: The current tax law does not provide a blanket tax exemption for startups. Companies are generally subject to a 30% corporate income tax rate, except for those operating in strategic industries under special tax incentives. Additionally, the Bujagali Hydro Power Project was previously granted a tax exemption, which is set to expire.
Proposed amendments:
A new provision granting a three-year tax exemption to startups founded by Ugandan citizens.
An extension of the tax exemption for the Bujagali Hydro Power Project until 2032.
The inclusion of the International Atomic Energy Agency (IAEA) as a listed institution for tax exemption purposes.
Implications if passed:
Entrepreneurs will have an opportunity to reinvest profits during their initial years, fostering innovation and economic diversification.
The extension of the Bujagali tax exemption will maintain stable electricity prices, supporting industrial growth and energy access.
Businesses and professionals dealing with the IAEA will need to understand the implications of its new tax-exempt status.
Tax Procedures Code (Amendment) Bill, 2025 under the Tax Procedures Code Act, Cap. 343
Current law: Currently, taxpayers must apply separately for a Tax Identification Number (TIN), which can be an administrative burden. Gaming and betting companies report their taxes independently, leading to revenue leakages. Penalties and interest on unpaid taxes accumulate without periodic waivers.
Proposed amendments:
National identification numbers (NINs) and business registration numbers (BRNs) will serve as TINs, simplifying taxpayer registration.
A centralized payment gateway for gaming and betting taxes to enhance compliance and revenue collection.
A waiver on interest and penalties for overdue taxes up to June 2026 to encourage tax compliance.
Implications if passed:
Businesses and individuals will find tax registration easier with the use of NINs and BRNs, reducing paperwork and administrative delays.
The gaming and betting industry will face stricter enforcement, ensuring all players contribute fairly to tax revenues.
Taxpayers with outstanding obligations should take advantage of the waiver to clear their liabilities without incurring extra costs.
Stamp Duty (Amendment) Bill, 2025 under the Stamp Duty Act, Cap. 339
Current law: Stamp duty is currently charged on various instruments, including mortgage deeds, agreements, and collateral securities, increasing transaction costs.
Proposed amendments:
Stamp duty exemption on agreements, mortgage deeds, and collateral securities.
Implications if passed:
Businesses and individuals will experience lower transaction costs when securing financing.
Easier access to credit and investment opportunities, as stamp duty costs will no longer be a barrier.
Increased formalization of agreements, as lower costs encourage proper documentation.
Excise Duty (Amendment) (No. 2) Bill, 2025 under the Excise Duty Act, Cap. 336
Current law: Excise duty applies to various goods, including alcohol, tobacco, and certain consumer goods. Currently, businesses must pay excise duty even on expired or damaged goods.
Proposed amendments:
Introduction of an excise duty remission for damaged, expired, or obsolete goods, reducing losses for businesses.
Adjustments to excise duty rates under Schedule 2 of the Excise Duty Act, affecting specific goods.
Implications if passed:
Businesses can apply for remission on expired goods, improving inventory management and reducing unnecessary tax burdens.
Consumers and businesses should monitor price adjustments due to revised excise duty rates, which may affect purchasing decisions.
The FY 2025/2026 tax amendment bills present a range of changes that, if passed, will impact taxpayers, businesses, and the economy at large.
The government’s focus on broadening the tax base, promoting investment, and enhancing compliance underscores the need for proactive preparation by all stakeholders. Taxpayers are encouraged to stay informed, assess how these proposed amendments might affect them, and seek professional tax advice where necessary.
Businesses should prepare to adapt their operations in line with the expected changes, ensuring they maximize benefits and remain compliant with the evolving tax landscape.
As these bills progress through parliamentary review and potential presidential assent, continuous engagement with tax authorities and policymakers will be crucial for shaping a fair and effective taxation system.
The writer is a Chartered Accountant & a-chartered Tax Advisor