Uganda’s Ministry of Finance unveiled a UGX 72.136 trillion national budget for 2025-26.
Uganda’s Ministry of Finance Planning and Economic Development has unveiled a UGX 72.136 trillion national budget for the 2025-26 financial year on 12 June, 2025.
Presented by Finance Minister Matia Kasaija at the Kololo Ceremonial Grounds, the budget signals a strong shift towards full monetisation of Uganda’s economy, underpinned by commercial agriculture, industrialisation, digital transformation, and expanded access to markets.
The 2025-26 budget introduces proposed amendments to income tax, value-added tax (VAT), excise duties, stamp duties, tax procedures, and customs regulations.
Income tax exemption for start-up businesses
The budget proposes a 3-year income tax holiday for startup businesses established by citizens after 1 July 2025.
Exemption from capital gains tax on transactions
A capital gains tax exemption has been proposed for transactions where an individual transfers assets to a company they have founded and continue to control.
Stamp duty removal of stamp duty on mortgages and agreements
The government proposes removing stamp duty on mortgages and agreements to reduce debt costs for businesses and individuals.
Waiver of interest and penalty for voluntary tax payment
The government has proposed extending the waiver on interest and penalties for taxes outstanding as of 30 June 2024, provided the principal tax is paid by 30 June 2026. This aims to help businesses and individuals settle tax liabilities and return to normal operations.
Value Added Tax (VAT) penalty reform for EFRIS non-compliance
The budget proposes implementing the Electronic Fiscal Receipting and Invoicing System (EFRIS) to improve tax compliance and reduce tax evasion. However, the UGX 6 million penalty per invoice, regardless of transaction value, raised concerns about unfairly burdening taxpayers. To address this, the penalty has been revised to twice the tax owed by the taxpayer.
Excise duty on cigarettes
- The government has proposed raising cigarette taxes to discourage use and boost revenue. Excise duty on soft cap cigarettes is now UGX 65,000 per 1,000 sticks, up from UGX 55,000; on hinge lid cigarettes, it’s UGX 90,000, up from UGX 80,000.
- For cigarettes outside the EAC, soft caps now face UGX 150,000 per 1,000 sticks (up from UGX 75,000), and hinge lids are taxed at UGX 200,000 (up from UGX 100,000).
Excise duty on beer
- The government proposes removing the 30% excise duty of UGX 950 per litre, whichever is higher, on beer made from Ugandan-grown and malted barley.
- The excise duty on beer with at least 75% local raw materials (excluding water) has been revised to 30% or UGX 900 per litre, up from UGX 650 per litre.
Import declaration fee on imported items
The budget imposes a 1% fee on the customs value of taxable items under the common external tariff.
Establishment of an export levy on wheat bran, cotton cake, and maize bran
An export levy of USD 10 per metric ton of wheat bran, cotton cake or maize bran has been proposed.
Textile taxes
- Effective 1 July 2025, the import duty on imported fabrics will be USD 2 per kilogram or 35%, whichever is higher. This is down from USD 3 per kilogram or 35%, whichever is higher.
- Effective 1 July 2025, the import duty on garments has been reduced to USD 2.5 per kilogram or 35%, whichever is higher, from USD 3.5 per kilogram or 35%, whichever is higher.
Digital tax replacement
The budget proposes replacing the 5% digital services tax on nonresidents earning from digital services in Uganda with a 15% withholding tax.
Income tax exemption for the Bujagali hydro-power project
The 2025-26 budget grants Bujagali Energy Limited an income tax exemption for one year up to 30 June 2026 under existing contractual obligations.
The amendments will take effect on 1 July 2025, if approved by the president.
