Uganda Implements New Tax Measures for FY2026/27 to Boost Revenue

The Ugandan government has rolled out significant tax reforms for the Financial Year 2026/27, with a strategic objective to bolster domestic revenue mobilization. Parliament’s approval of these measures is a cornerstone of efforts to finance the national budget, targeting Shs40.16 trillion from tax revenues alone.

Key adjustments have been made to the Income Tax Act. The Pay As You Earn (PAYE) threshold has been raised from Shs235,000 to Shs335,000 monthly, offering some relief to lower-income earners. Additionally, a 5 percent withholding tax on interest paid to foreign lenders is now in effect. To streamline rental income tax collection, taxpayers now have the option of monthly filings and payments. The reforms also introduce tax holidays for high-end tourism developers and offer deductions for bad debt provisions for Tier 4 financial institutions.

In terms of Value Added Tax (VAT), the registration threshold has been doubled from Shs150 million to Shs300 million in annual turnover, a move designed to ease the compliance burden on small businesses. VAT deferment has also been extended to inputs for iron ore processing, supporting the mining sector’s industrialization drive.

Excise duty has seen several increases. Petrol and diesel prices will rise by Shs200 per litre, while alcoholic beverages will incur Shs3,500 per litre in duty. Excise duty on motorcycles at first registration is now Shs500,000. Significant duty hikes are also noted on single-use plastics, cooking oil (to Shs400/litre), cement (to Shs750 per 50kg bag), and sugar (to Shs200/kg), alongside new duties on paints, varnishes, and cooking fats. Furthermore, stamp duty is now applicable to vehicle registration and transfers, with motorcycles and similar vehicles facing Shs30,000 and other vehicles Shs200,000.

External trade measures include a doubling of the environmental levy on imported used clothing to 30% of its CIF value, aiming to stimulate local textile manufacturing. The betting tax has also been increased from 20% to 30%.

To mitigate the impact, Parliament has approved waivers for principal taxes, penalties, and interest owed to the Uganda Revenue Authority as of June 30, 2016. These reforms, while potentially increasing obligations for some, are presented as necessary steps towards greater fiscal autonomy and the funding of national development priorities.

Source: https://www.monitor.co.ug/uganda/news/national/the-new-tax-measures-for-fy2026-27-5493012