Cost of Living: Fuel, Sugar, Cooking Oil and Cement
Among the most immediately felt impacts of the proposed tax bills will be on everyday commodities. The proposed excise duty of UGX 500 per litre or kilogram on cooking fat directly affects households across all income levels, as cooking oil is a staple food item. Increased taxes on fuel will raise transportation and distribution costs throughout supply chains, pushing up prices of goods and services well beyond the transport sector alone.
For the construction industry, the proposed doubling of excise duty on cement from UGX 500 to UGX 1,000 per 50 kilograms will increase building costs, potentially slowing down private and public construction projects. This comes at a time when Uganda is investing heavily in infrastructure, including preparations for the co-hosting of AFCON 2027, for which the government has committed UGX 905 billion.
The Kampala City Traders Association (KACITA) — representing over three million traders — has warned that these increases will raise the cost of doing business, constrain cash flows, and reduce the competitiveness of local enterprises, especially micro, small and medium-sized businesses (MSMEs) that are still recovering from previous economic shocks.
Impact on Salaries and the Workforce
The proposed Income Tax (Amendment) Bill introduces an additional 10% tax on annual income exceeding UGX 120 million, which represents a significant new levy on high-income earners. While this targets a relatively small segment of the population, critics argue it could hamper Uganda’s ability to attract and retain skilled professionals and senior executives at a time when competition for talent in East Africa is intensifying.
The Uganda Manufacturers Association (UMA) has called on government to either eliminate the proposed 40% income tax rate or reduce it to 35%, arguing it undermines Uganda’s competitiveness and investment climate. UMA has also proposed raising the Pay As You Earn (PAYE) threshold from UGX 235,000 to UGX 500,000 per month, citing the rising cost of living and the risk that excessive taxation could reduce compliance rather than increase revenue.
The Alternative Minimum Tax (AMT) of 0.5% on gross income for businesses reporting losses for seven consecutive years is also contentious. While intended to prevent abuse of loss carry-forward provisions, KACITA and UMA argue it penalises businesses genuinely struggling due to economic hardship, discouraging investment recovery and business formalisation.
The Digital Economy and Telecoms: New Tax Territory
The government’s push to tax digital and telecommunications services reflects a global trend of broadening the tax base to cover the rapidly growing digital economy. The proposed 10% withholding tax on commissions from telecom services — including mobile money operations — has drawn particular concern. Telecom operators, led by MTN, have appeared before Parliament requesting revision of the current 0.5% levy on mobile money withdrawals, warning that it disproportionately affects low-income Ugandans who depend on mobile money as their primary banking mechanism.
Adding a 10% withholding tax on telecom agent commissions would further squeeze thin-margin operators. KACITA’s chairman noted that this “directly reduces earnings of agents and distributors, many of whom operate on thin margins.” Given that mobile money has been instrumental in driving financial inclusion across Uganda, particularly in rural areas, measures that make the service more expensive risk reversing those gains.
The Secondhand Clothing Sector and Environmental Concerns
The doubling of the environmental levy on imported secondhand clothing from 15% to 30% of CIF value is one of the most debated proposals. The government frames this as an environmental measure, arguing that much of the imported used clothing ends up as waste shortly after entry, contributing to pollution and undermining domestic textile production. The policy also aligns with a broader African Union push to develop local textile industries.
However, the secondhand clothing sector is a significant source of livelihoods for thousands of Ugandans and contributes an estimated UGX 280 billion annually in tax revenue. KACITA has warned that a 100% increase in the surcharge burden is highly unsustainable for traders and risks job losses and reduced tax compliance. The sector serves a large proportion of the population who cannot afford new imported or locally-made clothing, meaning the levy could have regressive effects by increasing clothing costs for lower-income consumers.
The Property Market and Stamp Duty
The proposed doubling of stamp duty on land transactions from 1.5% to 3%, along with a new 5% withholding tax on gains from the sale of land in cities and municipalities, will significantly raise the cost of real estate transactions. For businesses seeking to acquire commercial premises, or for individuals buying or selling property, these changes could make transactions considerably more expensive.
The Institute of Certified Public Accountants of Uganda (ICPAU) has recommended that Parliament delete or revise the clause proposing to tax income from the disposal of non-business assets, as well as the 6% withholding tax on such transactions. The accountants argue that taxing unrealised and non-business disposals could create unfair burdens on ordinary citizens engaged in one-off property sales.
What Businesses and Individuals Should Do Now
The tax bills are still under Parliamentary review as of April 2026, with stakeholder hearings ongoing before the Finance Committee. The bills must be passed before the new financial year begins on 1 July 2026, but they may be amended or rejected in part or whole based on Parliamentary debate and stakeholder input. This means the final landscape could differ from the current proposals.
Businesses and individuals should take the following steps during this period. First, review your current tax position against the proposed changes to understand which measures would apply to you. Second, engage with your industry associations and professional bodies — Parliament is still listening, and written submissions to the Finance Committee carry weight. Third, begin scenario planning for how these changes, if enacted, would affect your cash flow, pricing strategy, and investment decisions.
For businesses in the construction, retail, logistics, telecommunications, and hospitality sectors especially, the proposed changes are wide-ranging and require proactive planning. Similarly, high-income earners and business owners with loss carry-forward positions should consult a qualified tax advisor to understand their potential new liabilities.
At Eddo Consults, we specialize in helping businesses and individuals navigate Uganda’s tax landscape. Contact us today for a personalised tax impact assessment and to explore strategies for the 2026/2027 financial year.