The Uganda Revenue Authority has outlined tax changes for the 2026/27 financial year, including higher income tax-free thresholds, new withholding tax rules, VAT reforms and customs duty measures.
The Ugandan Revenue Authority published a guidance on 23 June 2026 on tax amendments for the 2026/27 financial year, outlining changes to income tax, VAT, excise duty, tax administration and customs measures introduced under recently enacted legislation.
The reforms are intended to reduce the complexity of doing business, encourage investment and strengthen tax administration, with the government targeting revenue collection of UGX 44.18 trillion during the period.
Income tax measures
The guidance confirms that the annual tax-free threshold for resident individuals has increased from UGX 2.82 million to UGX 4.02 million, equivalent to UGX 335,000 per month. Individual income tax brackets have been revised accordingly.
A 15% withholding tax has been introduced on royalty payments to nonresidents, while a 10% withholding tax now applies to commissions earned from mobile money and telecommunications network services. The definition of “royalty” has been expanded to expressly include payments for software.
The amendments also introduce arm’s-length transaction requirements for controlled transactions.
Additional withholding tax measures include a 15% rate on gaming and betting winnings, excluding national lotteries and land-based casinos, and a 6% withholding tax on payments to public entertainers, including digital performers.
Individuals earning rental income may now file monthly provisional returns, aligning tax obligations with monthly rent collections.
VAT changes
The annual VAT registration threshold has doubled from UGX 150 million to UGX 300 million, reducing compliance requirements for smaller businesses.
The requirement to withhold 6% VAT has been removed for transactions where electronic invoices or electronic receipts are issued through the Electronic Fiscal Receipting and Invoicing System (EFRIS).
In addition, non-taxable persons who spend at least UGX 2 million within a 30-day period and obtain electronic receipts will qualify for a 5% tax refund.
Excise duty and tax administration
New excise duty rates apply to a range of products, including fuel, imported spirits, disposable plastic products, paints, varnishes, lacquers and cooking fat.
Under the Tax Procedures Code (Amendment) Act, 2026, all tax arrears, including principal tax, penalties and interest outstanding as of 30 June 2016, have been waived.
Interest and penalties outstanding as of 30 June 2025 will also be waived if the related principal tax is paid by 30 June 2027.
Penalties for failing to use EFRIS devices or tampering with electronic fiscal devices have been set at double the tax due or 10 currency points, whichever is higher.
Customs and trade measures
Duty remissions resulting in a 0% rate have been granted for selected manufacturing inputs, including those used in the production of smart electricity meters, motorcycle parts, mobile phones, synthetic brooms and leather footwear.
Higher import duties of up to 35% have been imposed on selected locally produced goods, while a 30% environmental levy based on CIF value now applies to worn clothing and related articles.
Vaccines, medicines and essential agricultural chemicals have been exempted from Infrastructure.
