Overview:
The government last month presented a Shs78.2 trillion budget, up from the initially proposed Shs69.3 trillion. Finance State Minister Henry Musasizi told MPs in January that local revenue is projected to rise from Shs36.7 trillion to Shs40 trillion.
The government plans to raise an additional Shs4.8 trillion through new taxes proposed in the Revenue Enhancement and Compliance Measures for the 2026/2027 financial year. The Ministry of Finance, Planning and Economic Development is expected to present the proposals to Parliament for debate, after which they will be scrutinized by the Parliamentary Committee on Finance. Officials declined to comment in detail, saying the measures are still at the proposal stage.
Normally, the Tax Amendment Bills are tabled in Parliament and immediately referred to the Finance Committee. Members of the committee consult stakeholders, review the proposals, and submit recommendations for discussion during the second and third readings. Finance Minister Matia Kasaija referred inquiries to Permanent Secretary Dr Ramathan Ggoobi, who was unavailable for comment. Ministry spokesperson Jim Mugunga said that the ministry will comment only after the proposals have been presented in Parliament and that consultations with relevant stakeholders are ongoing.
The government last month presented a Shs78.2 trillion budget, up from the initially proposed Shs69.3 trillion. Finance State Minister Henry Musasizi told MPs in January that local revenue is projected to rise from Shs36.7 trillion to Shs40 trillion.
The proposed Shs4.8 trillion in revenue will come from Shs2.3 trillion in tax reforms and the remainder from URA administrative measures. Under income tax reforms, PAYE for high-income earners earning over Shs10 million per month will rise to 40 percent from 30 percent. At the same time, low-income earners will see their PAYE threshold increase from Shs235,000 to Shs335,000 to account for rising living costs. The reforms also provide rental taxpayers the option to pay monthly instead of quarterly. A 15 percent withholding tax on gaming will be reintroduced, applied to the total payout rather than just the winnings. The government also intends to introduce a 5 percent Capital Gains Tax on the sale of non-business assets such as jewelry, shares in private companies, land over Shs100 million, and rental property. Exemptions include owner-occupied residences, land acquired otherwise than by purchase, and involuntary disposals like court-ordered auctions.
The proposals also include increases in fuel and sugar taxes. Excise duty on diesel and petrol will rise by Shs200 per litre, taking petrol from Shs1,550 to Shs1,750 and diesel from Shs1,230 to Shs1,430. Excise on spirits with less than 80 percent alcohol strength will rise from Shs1,700 to Shs3,500 per litre, while sugar will be taxed at Shs300 per kilogram, up from Shs100. Officials say the sugar increase restores its real value after years of inflation and market changes.
Other excise and VAT measures include raising excise duty on first registration of motorcycles from Shs200,000 to Shs500,000, targeting a fast-growing sector. Locally manufactured paints, varnishes, and lacquers will pay 3 percent of value or Shs50 per litre/kilogram, whichever is higher, while imported products will pay 10 percent. Cement, tiles, adhesives, white cement, and lime will attract Shs1,000 per bag or square metre, up from Shs500. Excise on cooking oil will rise from Shs200 to Shs400 per litre, while stamp duty on land transfers will increase from 1.5 percent to 3 percent. The VAT threshold will also rise from Shs150 million to Shs250 million, reducing compliance costs for small businesses that contribute minimally to revenue.
Officials say the reforms are designed to increase revenue without disproportionately affecting essential goods, while also addressing inflation, tax evasion, and administrative efficiency. Once passed, the measures are expected to strengthen Uganda’s fiscal base and ensure a more sustainable tax system for the coming financial year.