Important Things  You Need to Know About the Value Added Tax (Amendment) Bill, 2026 Uganda’s proposed Value Added Tax (Amendment) Bill, 2026 signals a major shift in the country’s tax framework, aimed at easing compliance for small businesses while strengthening incentives for key sectors like tourism, energy, and mining. With a strong focus on digital tax systems, particularly EFRIS, and targeted reforms to improve cash flow and investment attractiveness, the Bill reflects the government’s broader strategy to modernize tax administration and boost economic growth ahead of the 2026/27 fiscal year.

By Ankit Jangla, Bruno Kalibala, and Bruno Edwin Amanya

The Value Added Tax (Amendment) Bill, 2026, represents a strategic effort by the Government of Uganda to modernise tax administration and foster a more investor-friendly environment. These proposed changes, which are expected to take effect on 1st July 2026, focus on reducing the compliance burden for small businesses while creating more robust incentives for large-scale infrastructure and tourism projects. By shifting the focus toward digital transparency and sector-specific support, the Bill aims to streamline revenue collection and enhance the country’s economic competitiveness.

Streamlining Compliance Through EFRIS Integration

One of the most significant administrative shifts in the Bill is the move to reward businesses that utilise the Electronic Fiscal Receipting and Invoicing Solution (EFRIS). Currently, designated persons are required to withhold 6% VAT regardless of whether a transaction is captured in the EFRIS system. The new proposal removes this withholding requirement for purchases supported by valid e-receipts or e-invoices. This change is intended to reduce the duplication of tax tracking efforts, improve immediate cash flows for suppliers, and provide a tangible incentive for businesses to fully integrate with the URA’s digital systems.

Rationalising the VAT Registration Threshold

To improve the efficiency of tax administration, the Bill proposes a substantial increase in the annual VAT registration threshold from UGX 150 million to UGX 250 million. This reform acknowledges that many small businesses currently within the VAT net contribute relatively little revenue while consuming significant URA resources through time-consuming audits and refund claims. By exempting these smaller entities, the government aims to lower compliance costs for budding entrepreneurs and allow the tax authority to concentrate its oversight on medium and large-scale taxpayers who generate the bulk of VAT revenue.

Revitalising the Tourism and Hospitality Sector

The Bill introduces a critical amendment to support developers of hotels and tourism facilities, addressing a long-standing grievance regarding the “construction window” for VAT claims. Under current laws, developers can only claim input VAT on costs incurred within six months of opening—a period far too short for major construction projects. The proposed amendment extends this window to two years prior to the commissioning of the facility. To qualify, foreign investors must meet a capital threshold of USD 10 million, while East African citizens must invest at least USD 5 million. This measure is expected to significantly reduce the overall cost of high-end hospitality projects and make Uganda a more attractive destination for regional tourism investment.

Addressing Software and Digital Service Inputs

In a move toward tighter fiscal control over digital imports, the Bill proposes to deny taxable persons the right to claim input tax credits on imported software. Historically, taxpayers have been able to claim these credits because software was often categorised as a good. However, the new amendment seeks to block these claims regardless of whether the software is treated as a good or a service. This change will likely increase the operational costs for technology-dependent businesses and aligns with broader efforts to tax digital services more aggressively at the source.

Strategic Deferments and Exemptions for Growth Industries

The Bill also targets the mining and energy sectors for specific relief to encourage long-term industrial growth. The existing VAT deferment facility, which largely covers plant and machinery, will be expanded to include mining sector inputs. This is intended to provide mining companies with the same cash-flow support currently enjoyed by manufacturers. Additionally, in a major boost for the energy sector, the supply of goods and services to contractors and subcontractors of nuclear energy projects will be made VAT exempt, signalling the government’s commitment to diversifying the national energy mix.

Enhancing Fairness in the Refund and Interest Framework

Finally, the Bill proposes more equitable rules for tax refunds and the interest paid on late repayments by the URA. The threshold for claiming interest on a late refund will be moved from a static UGX 50,000 to a more flexible 5% of the tax refund amount, ensuring that the rule remains relevant for large-scale claims. Furthermore, to encourage ordinary consumers to demand EFRIS receipts, the government is lowering the spending threshold for non-taxable persons to qualify for a VAT refund from UGX 5 million to UGX 2 million within a 30-day period. This is a strategic move to turn the general public into “informal auditors” for the tax authority.

This article is an extract from the comprehensive Grant Thornton: Proposed Uganda Tax Amendments 2026commentary.

This article is co-authored by Ankit Jangla (Director – Tax), Bruno Kalibbala (Manager – Legal and Tax), and Bruno Edwin Amanya (Senior Associate). To access the full 2026 analysis or to consult on how these excise shifts will impact your business, contact Grant Thornton Uganda today at +256 200 807 600 or info@ug.gt.com. Schedule a comprehensive tax health check now to ensure your business remains resilient and 2026-ready.