Overview:
The incentive, announced in the 2026/27 National Budget, targets both local and foreign investors willing to commit substantial capital to tourism infrastructure as government seeks to position Uganda as a premium tourism destination.
KAMPALA — Investors putting money into high-end hotels and luxury tourism facilities will enjoy tax holidays under new government incentives aimed at attracting fresh investment into Uganda’s tourism sector.
The incentive, announced in the 2026/27 National Budget, targets both local and foreign investors willing to commit substantial capital to tourism infrastructure as government seeks to position Uganda as a premium tourism destination.
Presenting the budget at Kololo Ceremonial Grounds on Thursday, Finance Minister Henry Musasizi said foreign investors will qualify for the tax holiday if they invest at least $10 million (about Shs37.7 billion), while Ugandan investors will be required to invest a minimum of $5 million (about Shs18.8 billion).
“Introduction of a tax holiday for developers of hotels and other ultra-luxury tourism facilities investing at least USD10 million for foreign investors, and USD5 million for Ugandan investors,” Mr Musasizi said while outlining tax measures approved by Parliament.
The announcement comes as government ramps up efforts to attract more tourism-related investment following a strong recovery in the sector after the Covid-19 pandemic.
According to the minister, tourism earnings rose to $1.86 billion in 2025, surpassing the $1.4 billion recorded before the pandemic in the 2018/19 financial year. Tourism receipts had fallen to a low of $562 million in 2020 due to global travel restrictions.
“This remarkable recovery demonstrates growing international confidence in Uganda as a destination for business, investment and leisure,” Mr Musasizi said.
Tourism remains one of Uganda’s leading foreign exchange earners and a major source of employment, supporting thousands of businesses ranging from hotels and tour operators to transport providers and craft enterprises.
To sustain the sector’s growth, government has allocated Shs567.32 billion to tourism development in the next financial year, up from Shs430 billion in the current financial year.
The funding will support destination marketing, tourism infrastructure development, hospitality training, conservation programmes and wildlife protection initiatives.
Government also plans to invest in highway sanitation facilities, tourism refreshment centres and health tourism as part of efforts to improve visitor experience and diversify tourism products.
Mr Musasizi said ongoing infrastructure projects include development of the Rwenzori Central Circuit Trail, improvement of Kitagata Hot Springs, upgrades at the Source of the Nile in Jinja and preservation of cultural heritage sites in Moroto and Dokolo districts.
Construction of Kidepo International Airport is also underway to improve access to the Karamoja sub-region, one of Uganda’s emerging tourism destinations.
The minister said 12 regional aerodromes have been maintained to support tourism and trade connectivity across the country.
Government is also intensifying international marketing efforts under the “Explore Uganda, the Pearl of Africa” campaign.
Mr Musasizi said Uganda had leveraged major international platforms, including the Africa Cup of Nations (AFCON) 2025 in Morocco and the World Travel Market in London, to market the country and attract visitors.
The country has also secured bids to host international conferences as part of efforts to strengthen its position in the Meetings, Incentives, Conferences and Exhibitions (MICE) segment.
Beyond tourism, Mr Musasizi said investor confidence in Uganda remains strong, with Foreign Direct Investment reaching $3.2 billion in the 12 months to March 2026.
He added that Kampala-based start-ups attracted about $30 million in funding in 2025, up from $4 million the previous year, reflecting growing interest in Uganda’s innovation and entrepreneurship ecosystem.
The tourism incentives form part of government’s broader Tenfold Growth Strategy, which prioritises tourism development alongside agro-industrialisation, mineral-based industrialisation and science, technology and innovation.