Uganda is on the cusp of a significant tax regime transformation as Parliament considers the Tax Amendment Bills 2025, a package of legislative reforms designed to raise domestic revenues, promote compliance, and stimulate local economic activity. The proposed changes, which span the Income Tax, VAT, Excise Duty, Tax Procedures Code, Stamp Duty, and External Trade laws, are expected to take effect from 1 July 2025, marking a new chapter in the country’s fiscal landscape.
The bills, detailed in a comprehensive advisory by PwC Uganda’s tax team—Pamela Natamba, Trevor Lukanga, Hilda Kamugisha, Doreen Mugisha, Plaxeda Namirimu, Samson Ssonko, Sophie Kayemba, and Juliet Najjinda—outline a mix of incentives and tougher compliance rules, reflecting the government’s twin priorities of revenue mobilisation and economic development.
Income Tax Bill: New Incentives and a Nod to SMEs, but with Strings Attached
The Income Tax (Amendment) Bill, 2025 introduces a potentially game-changing exemption for small businesses. It proposes a three-year income tax holiday for businesses established by Ugandan citizens after 1 July 2025, provided they invest no more than UGX 500 million. The move is aimed at nurturing Uganda’s SMEs, which account for over 80% of private sector employment but often struggle with the high costs of formalisation.
However, concerns remain about the short exemption period and potential abuse. PwC’s advisory suggests extending the incentive to ten years to align it with existing investment incentives and to provide a meaningful runway for business growth. The Bill also requires beneficiaries to file both a tax return and a business information return, underscoring the government’s intent to formalise the SME sector.
In the energy sector, the Bujagali Hydropower Project’s income tax exemption is proposed for extension until 30 June 2032, a critical measure to keep electricity tariffs low and encourage industrialisation. Without this extension, tax costs risk being passed onto consumers, undermining the government’s competitiveness agenda.
The Bill also clarifies the definition of “reorganisation” for roll-over relief purposes, expanding eligibility beyond corporations to include individuals, partnerships, and other entities. This amendment promotes business continuity, succession planning, and estate management, particularly for family-owned businesses.
Meanwhile, the Bill proposes that non-resident digital service providers offering services to their Ugandan associates will no longer be subject to the 5% Digital Services Tax (DST) but will instead fall under the normal withholding tax regime. This change aims to close tax loopholes and ensure parity in tax treatment of related-party transactions. Additionally, the International Atomic Energy Agency (IAEA) is formally recognised as a tax-exempt entity, aligning Uganda’s tax treatment with international standards for multilateral organisations.
VAT Bill: A New Era of Enforcement for Importers and a Push for Local Value Addition
The VAT (Amendment) Bill, 2025 signals a crackdown on tax avoidance among importers by introducing an anti-fragmentation rule. This empowers the Uganda Revenue Authority (URA) to aggregate smaller import consignments—often split to avoid VAT registration—and treat them as a single transaction when assessing the UGX 150 million VAT threshold. The measure targets groupage cargo practices, commonly used to skirt tax obligations, and is expected to improve VAT compliance and create a fairer tax regime for local businesses.
Further VAT amendments include:
- Clarifying that “solar lanterns” (not “composite lanterns”) qualify for exemption, aiding the renewable energy sector.
- Removing VAT exemptions for billets used in manufacturing to incentivise local billet production.
- Exempting biomass pellets to encourage cleaner energy solutions and reduce reliance on charcoal.
- Zero-rating the sale of aircraft, correcting previous inconsistencies where leased aircraft were zero-rated, but outright purchases were not.
These changes reflect a deliberate policy shift towards industrialisation, environmental sustainability, and fair taxation, although businesses importing billets and groupage cargo will likely face increased compliance costs.
Excise Duty Bill: Higher Rates, Compliance Clarifications, and Support for Local Products
The Excise Duty (Amendment) Bill, 2025 introduces sweeping changes across multiple product categories, aimed at boosting government revenues while promoting local manufacturing and agricultural value chains. The proposed rate increases are significant and are likely to impact both businesses and consumers.
Among the most notable adjustments is the doubling of excise duty on imported soft cup cigarettes, from UGX 75,000 to UGX 150,000 per 1,000 sticks. Locally manufactured soft cup cigarettes will also see a hike from UGX 55,000 to UGX 65,000 per 1,000 sticks, while locally produced hinge lid cigarettes will rise from UGX 80,000 to UGX 90,000 per 1,000 sticks. The steepest increases are reserved for imported hinge lid cigarettes, which will attract an excise duty of UGX 200,000 per 1,000 sticks, up from UGX 100,000. These measures are a clear signal of the government’s intent to curb the consumption of imported tobacco products while protecting local manufacturers.
The alcohol sector is also affected, with excise duty on beer produced using at least 75% local raw material increasing from UGX 650 to UGX 900 per litre. Notably, a previous preferential rate for beer produced from barley grown and malted in Uganda has been repealed; such products will now fall under the general category for beer with 75% local raw material content. This streamlining aims to simplify compliance while ensuring continued support for local sourcing.
In the non-alcoholic beverage segment, the Bill proposes to tighten the requirements for excise duty relief on fruit and vegetable juices. Only juices containing at least 50% locally grown pulp—up from the current 30%—will qualify for a reduced excise duty rate. This change is expected to encourage greater use of Ugandan agricultural produce in beverage production, supporting farmers and agro-processors while reducing reliance on imported concentrates.
Beyond rate adjustments, the Bill introduces a long-overdue remission mechanism for excise duty paid on damaged, expired, or obsolete goods. Businesses that have previously navigated a cumbersome and uncertain process to recover excise duty will now benefit from a codified system. To qualify for remission, taxpayers must provide proof of duty payment, delivery documentation, a report from a competent authority outlining the cause of damage, and any additional documents required by the Minister of Finance. Remission can be granted either as a set-off against other excise duty liabilities or, upon written application, as a deduction from other tax liabilities not under dispute. This amendment addresses longstanding challenges faced by businesses with perishable or high-turnover stock and is expected to enhance compliance certainty.
While the fuel sector initially appeared to be targeted with higher excise rates—proposing increases from UGX 1,550 to UGX 1,650 per litre for petrol and from UGX 1,230 to UGX 1,380 per litre for diesel—these specific amendments were rescinded by the Minister of Finance. The rescission indicates a possible reconsideration of the inflationary pressures that higher fuel duties might exert on the broader economy.
Additionally, the Bill narrows the scope of excise duty on plastic bags and sacks to specific categories under HS codes 3923.21.00 and 3923.29.00, excluding items like vacuum packaging for food, juices, tea, and coffee, as well as bags for use in the manufacture of sanitary pads. This change is part of a broader strategy to address environmental concerns while maintaining fairness in taxation.
Overall, the Excise Duty (Amendment) Bill, 2025 signals a dual intent: to raise tax revenues through targeted rate increases while using the tax code to steer consumption patterns, promote local industries, and safeguard public health and the environment. Businesses in affected sectors—particularly tobacco, alcohol, and beverages—must prepare for higher tax burdens and review their pricing strategies accordingly. Meanwhile, the remission mechanism offers a welcome relief for companies navigating inventory losses, providing clarity and predictability in an area that has long been opaque.
Tax Procedures Code: From NINs as TINs to Gaming Gateways—Big Shifts in Compliance
The Tax Procedures Code (Amendment) Bill, 2025 proposes some of the most far-reaching structural reforms in Uganda’s tax administration system. These changes aim to strengthen compliance, enhance traceability, and tighten the enforcement net across sectors—but they also introduce significant operational and data protection considerations for businesses and individuals alike.
At the core of the amendments is the overhaul of the Tax Identification Number (TIN) system. Under the proposed law, all Ugandan individuals will use their National Identification Number (NIN), as issued by the National Identification and Registration Authority (NIRA), as their TIN. For non-individual entities—such as companies, NGOs, partnerships, and associations—their registration number issued by the Uganda Registration Services Bureau (URSB)will become the default TIN. In the case of foreign persons, the system will accept TINs issued by their home tax authorities, provided Uganda has a tax treaty or information exchange agreement with the respective jurisdiction.
This integration of tax registration with national identity systems is a bold move aimed at reducing tax evasion, broadening the tax base, and formalising Uganda’s informal economy. By creating a single, unified identifier for tax and legal purposes, the government intends to streamline cross-agency data sharing, reduce duplications, and ensure that individuals and entities cannot operate outside the tax net. However, this shift raises serious concerns about data privacy, system readiness, and the potential exclusion of informal sector players who may lack the necessary documentation to comply.
Further strengthening compliance, the Bill imposes a strict licensing rule: local authorities, government bodies, and regulators are prohibited from issuing business licenses, authorisations, or registering instruments requiring stamp duty to any individual or entity without a valid TIN—be it a NIN, URSB registration number, or foreign-issued TIN. This effectively links tax registration to all formal business activities, further tightening the regulatory environment.
For businesses with outstanding tax liabilities, the Bill offers a temporary lifeline through a waiver of interest and penalties. All interest and penalties on tax arrears up to 30 June 2024 will be waived if the principal tax is fully paid by 30 June 2026. Partial payments will also qualify for a pro-rata waiver. This measure aims to unlock dormant revenues, encourage voluntary compliance, and support businesses recovering from economic shocks, including the lingering effects of COVID-19, inflationary pressures, and regional instability. However, PwC’s advisory notes that for this waiver to be effective, it must be implemented without ambiguity, as past waivers have sometimes been undermined by complex “order of payment” rules that erode taxpayer confidence.
One of the most transformative—and controversial—proposals is the establishment of a centralised payments gateway system for Uganda’s gaming and betting sector. The Bill introduces new Sections 93A and 93B to the Tax Procedures Code, requiring all wagers and payouts to flow through a centralised system licensed by the Bank of Uganda under the National Payment Systems Act. This system must be directly integrated with the Uganda Revenue Authority (URA), enabling real-time monitoring of gaming transactions and facilitating immediate tax assessments.
Non-compliant operators who fail to integrate with the gateway face severe penalties: either double the gaming or withholding tax due or UGX 110 million, whichever is higher. This shift is expected to reshape the gaming sector, likely forcing smaller operators and those with legacy systems out of the market, while creating higher compliance costsfor surviving players who must invest in systems integration. It also reflects a growing trend of inter-agency collaboration—between the URA, the Bank of Uganda, and sector regulators—aimed at creating a seamless tax compliance ecosystem.
Finally, the Bill introduces a critical amendment that tightens the accountability net for entities enjoying tax exemptions. A new Section 93C mandates that any taxpayer who benefits from a tax exemption must strictly maintain the conditions under which the exemption was granted. Failure to do so will result in the taxpayer becoming liable for all taxes that would have been due during the period of non-compliance, and this liability is explicitly stated as personal—meaning it can be enforced against directors, managers, or responsible individuals, not just the entity.
This clause is a clear signal that the government is serious about curbing abuse of tax incentives, particularly in politically sensitive sectors such as infrastructure, energy, and agriculture, where large-scale tax exemptions are common. Businesses enjoying such exemptions must now implement rigorous internal compliance systems, regularly audit their adherence to qualifying conditions (such as employment quotas or investment thresholds), and document their compliance meticulously.
Overall, the Tax Procedures Code amendments represent a paradigm shift in how Uganda enforces tax compliance—moving from a largely self-reporting system to one characterised by real-time monitoring, cross-agency data integration, and direct enforcement. While the changes promise a more equitable tax environment in the long term, businesses will face significant transitional challenges, including the need for IT system upgrades, legal compliance reviews, and staff training.
As PwC Uganda’s team cautions, businesses should act now—review internal controls, ensure TINs are correctly aligned, assess exposure to gaming sector compliance requirements, and prepare for the full operational impact of these sweeping reforms.
Stamp Duty Bill: Removing Barriers to Credit
The Stamp Duty (Amendment) Bill, 2025 is a bold reform that seeks to simplify Uganda’s stamp duty regime, lower the cost of doing business, and promote access to credit—especially for small businesses, farmers, and the agricultural sector.
At the heart of the Bill is a proposal to introduce a nil stamp duty rate on any agreement or memorandum of an agreement. This sweeping measure, if passed into law, will eliminate the UGX 15,000 stamp duty that currently applies to a wide range of business agreements, from contracts and leases to partnership deeds and commercial arrangements. In the past, taxpayers have faced compliance challenges and ambiguities around what exactly qualifies as an “agreement” subject to stamp duty. The URA has occasionally issued demand notices for stamp duty compliance on informal or minor agreements, creating uncertainty and friction for businesses. The proposed nil rate effectively clears up this confusion, creating a simpler, fairer, and more predictable stamp duty regime for all parties involved.
For the financial sector, the Bill introduces another game-changing proposal: a nil stamp duty on mortgage deeds and any instrument where collateral, auxiliary, or substituted security is given by way of further assurance, provided the principal security is already duly stamped. This amendment addresses a longstanding challenge in Uganda’s credit market, where borrowers—especially small businesses and farmers—have faced significant costs when securing loans through legal or equitable mortgages. Under the current law, stamp duty on mortgage deeds is charged at 0.5% of the total value, while other mortgages attract a UGX 15,000 fee. These charges often act as a barrier to credit access, discouraging borrowers from formalising collateral arrangements or deterring financial institutions from extending secured credit to undercapitalised borrowers.
By waiving stamp duty on mortgage deeds, the government aims to unlock credit for the private sector, support financial inclusion, and stimulate sectors like agriculture and manufacturing that rely on collateral-based financing. For the agricultural sector in particular, the proposal to introduce nil stamp duty on crop mortgages is a targeted intervention that could have far-reaching impacts. Farmers and agribusinesses often use crops as collateral to access working capital, especially during harvest seasons. The current stamp duty regime imposes additional costs on these transactions, limiting their uptake. The proposed waiver not only reduces the cost of credit but also encourages formalisation of crop-based lending, strengthening the agricultural finance ecosystem.
The proposed changes are also expected to reduce transaction costs for banks and microfinance institutions, enabling them to extend more affordable credit to underserved markets. For example, by removing the stamp duty burden, lenders can streamline their loan processing costs and pass on savings to customers in the form of lower interest rates or fees. This aligns with broader national objectives such as boosting financial inclusion, enhancing access to finance for women and youth, and supporting the growth of agro-industrial value chains.
While the removal of stamp duty on agreements, mortgages, and crop-based collateral is a welcome step towards an enabling business environment, the success of these reforms will depend on effective implementation. Financial institutions will need to adjust their documentation processes and ensure they comply with the new provisions once enacted. Regulators and tax administrators will also need to issue clear guidance to avoid unintended loopholes or abuse, such as the improper classification of documents to evade stamp duty on transactions where it remains applicable.
PwC Uganda’s tax team, note that the removal of stamp duty on these instruments could lead to a significant increase in the formalisation of credit transactions and help unlock financing for sectors that have long been constrained by transaction costs. However, they also caution that stakeholders—particularly borrowers and lenders—must stay vigilant in understanding the scope and limits of the exemptions to ensure proper compliance and avoid unintended liabilities.
Ultimately, the Stamp Duty (Amendment) Bill, 2025, if passed into law, has the potential to reshape Uganda’s credit landscape, reduce barriers to finance, and support the government’s broader goals of financial deepening, private sector development, and inclusive economic growth. It is a strong signal that tax policy can be a lever not just for raising revenues, but also for unlocking economic potential—especially in critical sectors like agriculture, housing, and small enterprise development.
External Trade Bill: New Levies on Imports and Exports to Boost Local Industry
The External Trade (Amendment) Bill, 2025 introduces a 1% import declaration levy on the customs value of goods imported for home use, excluding items under the EAC’s fifth schedule, plant and machinery, and special government projects. This aligns Uganda’s import regime with regional standards but is expected to increase the cost of imports for many businesses.
The Bill also introduces an export levy of USD 10 per metric tonne on wheat bran, cotton cake, and maize bran, aimed at promoting local animal feed production and reducing foreign exchange outflows. The formalisation of the 1.5% infrastructure levy on imports gives legal backing to a charge previously applied without explicit legislative authority.
A Delicate Balancing Act
Uganda’s 2025 Tax Amendment Bills reflect the government’s balancing act between incentivising local industry, promoting compliance, and meeting ambitious revenue targets. While SMEs and agriculture stand to benefit from targeted exemptions, sectors like importers, gaming and betting operators, and manufacturers reliant on imported inputswill need to adjust to a stricter compliance environment and higher tax burdens.
The PwC Uganda team—Pamela Natamba, Trevor Lukanga, Hilda Kamugisha, Doreen Mugisha, Plaxeda Namirimu, Samson Ssonko, Sophie Kayemba, and Juliet Najjinda—stress the importance of early engagement, compliance audits, and strategic tax planning to navigate these reforms. As the Bills move through Parliament, businesses are urged to review their operations, assess potential impacts, and prepare for what could be the most significant tax shift in Uganda in recent years.