The changes took effect on 1 July 2025.
Ugandan President Yoweri Museveni signed several tax amendment bills into law to implement the tax measures of the 2025-2026 Budget on 30 June 2025.
The newly signed laws include the Value Added Tax (Amendment) Act, 2025; Stamp Duty (Amendment) Act, 2025; Excise Duty (Amendment) (No.2) Act, 2025; Tax Procedures Code (Amendment) Act, 2025; Supplementary Appropriation Act, 2025; Hides and Skins (Export Duty) (Amendment) Act, 2025; External Trade (Amendment) Act, 2025; and the Appropriation Act, 2025.
The changes took effect on 1 July 2025.
Key updates 2025-2026 of the budget:
Revised tax on digital Services
Digital services provided by non-residents to associates in Uganda are now excluded from the 5% digital services tax. Instead, they are subject to a 15% withholding tax.
Income tax Holiday for small start-ups
A three-year income tax exemption has been introduced for start-up businesses established after 1 July 2025 by Ugandan citizens, provided the initial investment capital does not exceed UGX 500 million.
New VAT exemptions and zero-rating
The amendments provide a VAT exemption for solar lanterns and biomass pellets. In addition, supplies (purchases) of aircraft are now zero-rated for VAT, expanding the current zero-rating beyond aircraft leasing.
Exemption of income earned IAEA
The amendment added the International Atomic Energy Agency (IAEA) to the list of organisations whose income is exempt from tax under the Second Schedule of the Income Tax Act.
Reorganization definition expanded
The amendment broadens the definition of “reorganisation” from transfers solely between related companies to include asset transfers between any person, excluding controlled individuals, followed by stock distribution. This expands the range of restructuring transactions covered, including those involving individuals transferring assets to companies they control.
New import levies introduced
A 1.5% infrastructure levy and a 1% import declaration fee now apply to all goods imported for home use. Goods exempted under the East African Community Customs Management Act are not subject to these charges.
Waiver of interest and penalties
Interest and penalties on outstanding principal tax due up to 30 June 2024 will be waived if the principal tax is fully paid by 30 June 2026. Partial payments will receive proportional waivers.
Bujagali hydropower project exemption extended
The tax exemption for the Bujagali hydropower project has been extended for one more year, until 30 June 2026.
Earlier, Uganda’s Ministry of Finance Planning and Economic Development unveiled a UGX 72.136 trillion national budget for the 2025-26 financial year on 12 June 2025.
