New taxes target sugar, salary, fuel to raise Shs4.8 trillion

The government is preparing a new set of tax measures aimed at raising an additional Shs4.8 trillion in the Financial Year 2026/2027, according to a report by Daily Monitor.

The proposals, developed by the Ministry of Finance, Planning and Economic Development, are expected to be presented before Parliament for debate.

Officials declined to give full details, noting that the measures are still under discussion.

The ministry spokesperson, Jim Mugunga, said the government will only speak fully once the proposals are formally tabled, adding that consultations with stakeholders are ongoing as part of the budget process.

The government recently presented a Shs78.2 trillion budget, higher than the earlier Shs69.3 trillion.

Finance State Minister Henry Musasizi earlier told Parliament that domestic revenue is projected to rise from Shs36.7 trillion to Shs40 trillion.

Under the proposed reforms, part of the additional revenue will come from tax policy changes, while the rest will be generated through improved tax administration by the Uganda Revenue Authority.

The proposals include changes to income tax. High-income earners earning above Shs10 million per month could see their Pay As You Earn rate rise to 40 percent from the current 30 percent.

At the same time, the threshold for lower earners may increase from Shs235,000 to Shs335,000 to ease pressure caused by the rising cost of living. Government documents indicate that this adjustment is meant to support low-income workers while balancing revenue needs.

Authorities are also considering allowing rental taxpayers to make monthly payments instead of quarterly ones. Other proposals target new revenue streams.

A 5 percent tax may be introduced on capital gains from the sale of certain non-business assets such as high-value land, shares in private companies and rental property, with some exemptions including inherited land and owner-occupied homes.

Fuel taxes are also set to rise by Shs200 per litre for both petrol and diesel. Officials argue that such adjustments follow past practice and reflect inflation trends. They maintain that the increase will not significantly disrupt pump prices.

Consumers may also face higher costs on everyday goods. Excise duty on sugar is set to triple from Shs100 to Shs300 per kilogram, while taxes on spirits, cooking oil and other products will increase.

Government officials argue that these changes are needed to restore the real value of taxes that have been eroded over time. Motorcycle registration fees could rise sharply, and new or revised taxes are proposed for construction materials, paints and tiles.

Stamp duty on land transfers may also increase from 1.5 percent to 3 percent. The Value Added Tax threshold is expected to rise from Shs150 million to Shs250 million, with the government arguing that many small businesses currently contribute little VAT but create high administrative costs.

Parliament is expected to scrutinise the proposals through its Finance Committee before a final decision is made.