Introduction to the 2026/2027 Tax Measures in Uganda
The proposed tax measures for the 2026/2027 financial year have drawn mixed reactions from various stakeholders in Uganda. While the business community, economists, and civil society organizations have generally welcomed the initiative, they have also expressed concerns about certain aspects of the proposals. The Ministry of Finance, Planning and Economic Development recently tabled the budget proposals before parliament, outlining a total resource envelope of UGX 84.2 trillion. Domestic revenues are expected to cover 52.8% of this budget, which translates to UGX 44.4 trillion. This is a significant increase from the UGX 37.2 trillion projected for the current financial year.
With external support dwindling and public debt reaching UGX 126 trillion, the government has introduced a series of tax bills aimed at increasing revenue. These include:
- The Income Tax (Amendment) Bill, 2026
- The Excise Duty (Amendment) Bill, 2026
- The Value Added Tax (Amendment) Bill, 2026
- The Tax Procedures Code (Amendment) Bill, 2026
- The Stamp Duty (Amendment) Bill, 2026
- The External Trade (Amendment) Bill, 2026
- The Lotteries and Gaming (Amendment) Bill, 2026
- The Traffic and Road Safety (Amendment) Bill, 2026
Reactions from Civil Society and Experts
The Tax Justice Network Uganda, a coalition of civil society organizations advocating for a fair and transparent tax system, has welcomed some of the proposals but emphasized the need for increased domestic revenues. They criticized the tax exemptions granted to members of parliament and other sectors like the judiciary, arguing that such exemptions undermine equitable taxation.
Jane Nalunga, Executive Director of SEATINI Uganda, highlighted the importance of focusing on economic growth and domestic revenue mobilization in light of global economic disruptions and donor policies. She stressed the need for prudent use of available resources.
The group also supported the proposed increase in excise duty on un-denatured spirits of alcoholic strength by volume of less than 80 percent, from UGX 1,700 per litre to UGX 3,500. They argue that this measure not only raises revenue but also helps reduce alcohol overconsumption.
Talibita Moses, a lawyer with the Uganda National Health Consumer’s Organisation, praised the increase in excise duty on sugar and cooking oils, stating that taxes should be used to discourage consumption of harmful substances. However, he noted that while sugar is essential for micro and small-scale industries, there should be policies to prevent industrial products from undercutting household producers.
Moureen Wagubi, Executive Director of the Institute for Social Transformation, argued that while health is a priority, Uganda is not yet at a stage where sugar and cooking oil should be discouraged. She warned that high excise duties could negatively impact small businesses, leading to broader economic consequences and pushing women back into dependency. She proposed a phased increase in excise duty on sugar over three years.
Criticisms and Concerns
Wagubi also criticized the proposed increase in Stamp Duty on land transfers, from 1.5% to 3%. She argued that this could make it harder for the poor, including orphans, to acquire land. The amendment also affects motor vehicle transfers, with small motorcycles charged at UGX 50,000, small personal vehicles at UGX 100,000, and commercial vehicles at UGX 200,000.
Imelda Namugga, an economist and board member at the Civil Society Budget Advocacy Group, welcomed the Stamp Duty on vehicle registration and transfers but suggested that commercial vehicles should be categorized by size and environmental impact, with higher charges for heavy-duty vehicles.
Another contentious proposal is the increase in the Pay-as-You-Earn (PAYE) threshold from UGX 235,000 to UGX 335,000 per month. While experts see this as a step forward for lower-income earners, Nalunga argues that PAYE should be applied to those earning UGX 600,000 per month, as this is the estimated income needed to meet basic needs comfortably.
Controversial Tax Exemptions
The Income Tax (Amendment) Bill 2026 proposes extending the tax holiday for the Bujagali Hydropower Project from June 30, 2026, to June 30, 2032. This has sparked debate, as Parliament has previously been hesitant to grant long-term tax exemptions. In May 2025, Parliament rejected a similar proposal, citing concerns about the impact on electricity tariffs.
Minister of State for Finance, Henry Musasizi, defended the limited extensions, arguing that they are necessary to honor contracts and prevent higher electricity bills. However, the Tax Justice Alliance has criticized the exemptions, stating that they have not led to the promised reduction in energy costs.
Environmental and Importation Measures
The introduction of taxes on plastics has been welcomed as a positive environmental measure, with calls to further increase these taxes to address environmental degradation. The government also proposes increasing the excise duty on second-hand clothes to 30%, aiming to reduce their importation and mitigate environmental harm.
Baker Bahasha, Research and Policy Analyst at the Kampala City Traders Association, suggested that used clothes should be categorized by quality, as some remain in good condition despite being labeled as worn.
Conclusion
The 2026/2027 tax measures reflect a complex balance between revenue generation, economic stability, and social equity. While many stakeholders appreciate the efforts to strengthen domestic revenue, they also emphasize the need for careful implementation to avoid unintended negative consequences. As the debate continues, the focus remains on ensuring that the tax reforms support sustainable development and inclusive growth in Uganda.
