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On 1st April 2026, the proposed tax changes for the financial year 2026/2027 were tabled before the Parliament of Uganda for consideration. If passed into law by the parliament and assented to by the President of Uganda, the tax changes would take effect on 01 July 2026.
13 April 26
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This Tax Alert analyses the proposed amendments contained in the Income Tax (Amendment) Bill, 2026; the Value Added Tax (Amendment) Bill, 2026; the Excise Duty (Amendment) Bill, 2026; the Tax Procedures Code (Amendment) Bill, 2026; the Stamp Duty (Amendment) Bill, 2026; the Lotteries and Gaming (Amendment) Bill, 2026; the External Trade (Amendment) Bill, 2026; and the Road Safety (Amendment) Bill, 2026.
The key proposals are set out below.
The Value Added Tax (Amendment) Bill, 2026
The Bill proposes to exempt VAT designated persons who pay for taxable supplies from complying with VAT withholding obligations where such persons have been issued with e-invoices and e-receipts. This proposal recognises that the tax risk relating to non-payment or non-detection of VAT which are currently addressed through the VAT withholding obligations stand mitigated or alleviated where e-invoices or e-receipts have been issued by the supplier. The VAT withholding obligations would therefore present an unnecessary tax compliance burden in the circumstances.
The Bill seeks to revise the VAT registration threshold upwards from the annual turnover of Uganda Shillings 150 million to Uganda Shillings 250 million. The small businesses with an annual turnover below the UGX. 250 million will not qualify for VAT registration as well as any related benefits and obligations.
The Bill proposes to allow input VAT credit for VAT payable on selected construction materials, machinery and equipment; civil works and services by an investor developing a hotel or tourism facility, as long as such goods or services occurred not more than 2 years prior to commissioning the hotel or facility. The other conditions are that the investment should be at least USD 10 million for a foreign investor or USD 5 million for a citizen. This proposal serves to reduce construction costs for hotel or tourism facilities because the input VAT credit covering 2 construction years would be creditable or claimable or refundable to the investor.
The Bill proposes to disallow input tax credit in respect of imported software. This serves to restrict recovery of VAT cost incurred on imported software, for VAT accounting purposes.
The VAT Bill also proposes to empower the Minister to prescribe the terms and conditions on payment of VAT including due date for payment of VAT on the inputs of the Mining Sector.
The Bill proposes to incentivize non – VAT registered persons who purchase goods or services from VAT registered persons and are issued e-invoices or e-receipts, by lowering the qualifying value of the purchases, from the current Uganda Shillings 5,000,000 within 30 consecutive days to Uganda Shillings 2,000,000. The incentive is a refund of 5% of the tax paid by the non – VAT registered person.
The VAT Bill also proposes to exempt supplies related to ‘nuclear energy’ from VAT.
Additionally, the Bill includes the Arab Bank for Economic Development in Africa among the “Public international organisations” for VAT purposes.
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Should you have any questions regarding this article, please do not hesitate to contact Edward Balaba