Uganda’s government has tabled a broad package of tax amendment Bills ahead of the new financial year, introducing environmental levy on imported secondhand clothes, new excise duties across multiple sectors, and targeted income tax and VAT reforms aimed at boosting revenue and improving compliance.
Uganda’s Parliament is considering a wide-ranging package of draft tax Bills for the 2026/2027 Budget, tabled by the government on 1 April 2026, which proposes sweeping changes across environmental levies, excise duties, VAT and income tax.
The measures include environmental levy on imported secondhand clothes, higher excise duties on selected goods, targeted withholding taxes across key sectors, and revisions aimed at strengthening compliance while adjusting revenue measures ahead of the new financial year.
Income tax and withholding tax
The Income Tax (Amendment) Bill, 2026 introduces targeted withholding taxes across several sectors.
Cross-border finance
Interest paid by resident companies to non-resident financial institutions will be subject to a 5% withholding tax, aimed at strengthening compliance on cross-border transactions.
Asset transactions
Payments for the purchase of non-business assets will attract a 6% withholding tax.
The reforms also introduce new taxes on gains from non-business asset disposals, backed by the same 6% withholding tax.
Telecommunications and digital services
A 10% withholding tax is proposed on commissions earned from telecommunication services, including:
- mobile money operations
- related network services
Software payments will also be reclassified as royalties, making them subject to a higher withholding tax.
Gaming and entertainment
Net winnings from betting and gaming activities will be taxed at 15%.
The tax will apply to net winnings, defined as the amount received less the stake placed.
Payments made to public entertainers will attract a 6% withholding tax, formalising taxation in the entertainment industry.
Corporate and high-income taxes
For companies reporting losses over long periods, the Bill proposes a 0.5% minimum tax.
For high-income earners, an additional 10% tax will apply to annual income exceeding UGX 120 million.
The package also includes adjustments to personal income tax thresholds aimed at easing the burden on low-income earners.
VAT
On the indirect tax side, the government is proposing several VAT changes.
The VAT registration threshold will be raised from UGX 150 million to UGX 250 million.
The Bills also propose:
- removing withholding VAT where electronic receipts are issued
- denying input VAT on imported software
The removal of withholding VAT for businesses using the Electronic Fiscal Receipting and Invoicing System (EFRIS) is designed as an incentive for digital compliance.
Environmental levy and external trade
The government has tabled new tax Bills that include a 30% environmental levy on imported secondhand clothes.
The proposed measure is contained in the External Trade (Amendment) Bill, 2026, which was tabled by the Minister of State for Finance, Planning and Economic Development (General Duties), Hon. Henry Musasizi, during plenary on Wednesday, 1 April 2026, chaired by Speaker Anita Annet Among.
Under the Bill, the levy will apply as a 30% charge on the cost, insurance and freight (CIF) value of worn clothing and other worn articles.
According to the Bill, the measure is intended to mitigate the influx of secondhand clothing, which the government says has significant environmental consequences, particularly in waste management, as a large share of imported garments quickly becomes waste after entering the market.
The Bill also proposes to exempt imports of vaccines, medicines, medical supplies, pesticides, rodenticides, acaricides and insecticides from both the infrastructure levy and the import declaration fee.
Excise duty
The Excise Duty (Amendment) Bill, 2026 introduces several new and revised duties across key sectors.
Alcohol
Imported un-denatured spirits with an alcoholic strength of less than 80% will attract an excise duty of 80% or UGX 3,500 per litre, whichever is higher.
Construction Materials
A flat excise duty of UGX 1,000 per 50 kilogrammes is proposed on:
- cement
- adhesives
- grout
- white cement
- lime
Paints and Industrial Products
Locally manufactured paints, varnishes and lacquers will be taxed at 3% or UGX 50 per litre or kilogramme.
Imported versions will face a higher rate of 10% or UGX 2,000 per litre or kilogramme, whichever is higher.
Cooking Oil and Household Goods
Cooking fat will attract a new excise duty of UGX 500 per litre or kilogramme.
The broader reforms also indicate higher excise duties on selected goods, including fuel, sugar and plastics, alongside new duties on motor vehicles and increased stamp duty on property transactions.
Tax arrears relief
The package also includes a waiver for tax arrears predating 2016, offering relief on older outstanding tax liabilities.
