Income Tax Proposals
The Income Tax (Amendment) Bill, 2026 introduces several targeted withholding taxes and a new minimum tax measure. A new Alternative Minimum Tax (AMT) of 0.5% on gross income is proposed for businesses that have reported no chargeable income and have carried forward losses for at least seven consecutive years. This measure is designed to ensure that even loss-making businesses contribute a minimum level of tax.
For high-income earners, the bill introduces an additional 10% tax on annual income exceeding UGX 120 million, effectively raising the top marginal rate for the highest earning bracket. The bill also introduces a 5% withholding tax on interest paid by resident companies to non-resident financial institutions, to strengthen tax compliance on cross-border financial transactions.
In the digital economy and telecommunications sector, a 10% withholding tax is proposed on commissions earned from telecom services, including mobile money operations. Gaming and betting activities will attract a 15% withholding tax on net winnings. Payments to public entertainers will attract a 6% withholding tax, and purchases of non-business assets such as land in cities and municipalities will attract a 5% to 6% withholding tax.
Excise Duty Proposals
The Excise Duty (Amendment) Bill, 2026 proposes revisions across a wide range of goods. In the alcoholic beverages category, imported un-denatured spirits with an alcoholic strength of less than 80% will be taxed at 80% or UGX 3,500 per litre, whichever is higher. The construction sector faces a proposed flat excise duty of UGX 1,000 per 50 kilograms on cement, adhesives, grout, white cement and lime — doubling the previous UGX 500 levy. Cooking fat will attract a new excise duty of UGX 500 per litre or kilogram, affecting household budgets across the country.
In the manufacturing sector, locally produced paints, varnishes and lacquers will be taxed at 3% or UGX 50 per litre or kilogram, while imported versions will attract a significantly higher rate of 10% or UGX 2,000 per litre or kilogram, whichever is higher. This differential is designed to protect and encourage domestic manufacturing.
VAT Proposals
The Value Added Tax (Amendment) Bill, 2026 proposes to increase the VAT registration threshold from UGX 150 million to UGX 250 million, which means businesses with annual turnover below this level would no longer be req