Dutch investors press government on tax exemptions, Sovereignty Act

Dutch investors operating in Uganda have pressed the government for clarity on strategic investor tax exemptions and the implementation of the Protection of Sovereignty Act, saying the uncertainty is affecting their operations.

Members of the Netherlands-Uganda Trade and Investment Platform (NUTIP) raised the concerns on Wednesday, October 7, at a meeting with government agencies at the State House Investors Protection Unit (SHIPU) offices in Kampala.

NUTIP board member Donah Loyce Katushabe said investors wanted the government to explain how the strategic investor exemptions in the Income Tax Act apply to them.

“Members want clarity on the strategic investor exemptions provided for in the Income Tax Act,” she said.

Katushabe also listed access to tax incentives, the tax treatment of different business models and the implementation of the Protection of Sovereignty Act among the issues troubling investors. She said foreign companies supplying goods from abroad wanted the government to reconsider its approach to contracting them in foreign currency.

The Deputy Ambassador of the Kingdom of the Netherlands to Uganda, Bouwe-Jan Smeding, backed the investors’ call, saying tax administration required continued dialogue and that investors needed clarity on policy and the handling of tax disputes.

He said that even where a government institution could not immediately resolve an issue, a clear explanation would help build investor confidence.

“We all have the same horizon: getting a better business environment in Uganda, because that will help Uganda in connecting, in getting forex, and it helps all businesses to have healthy businesses with healthy profits,” Smeding said.

NUTIP board chairperson Mark Dieleman urged the government to protect businesses and work more closely with the private sector to create a safe and predictable environment.

“We always say, no business, no economy. It’s as simple as that,” he said.

In response to the concerns over the Sovereignty Act, Dr Stephen Okello, Secretary of the NGO Bureau, said no foreign agency had been registered under the law so far. Dr Okello, who represented the Permanent Secretary of the Ministry of Internal Affairs, said the government had put in place a framework to fully operationalise the Act and would carry out a nationwide awareness campaign.

“Another key step which should be taken is sensitisation. We are going to have a sensitisation drive around the country so that people know what the Act means and whether it affects investments or not,” Dr Okello said.

On taxation, Abel Kagumire, who represented the Commissioner General of the Uganda Revenue Authority (URA), said the tax body could only apply taxes as provided for in laws passed by Parliament and assented to by the President.

He said agricultural inputs, plant and machinery, and agro-processing equipment already enjoy various tax incentives, although some components may attract duty depending on how they are classified under the law.

Kagumire said investors seeking duty remission on imported raw materials could use mechanisms available under Uganda and East African Community rules. Once URA confirms that an import is a raw material for production rather than a finished good for sale, he said, the relevant committee can assess the factory and recommend the item for the eligible list.

“We always take note of the presidential directive that we should not delay investors and that we should facilitate you very well without asking for a service, a price or anything,” he said.

The Head of SHIPU, Col Edith Nakalema, told the investors that the concerns raised would receive prompt coordination and follow-up. She said President Yoweri Museveni set up the unit with a directive to make Uganda a “zero-delay destination” for foreign and domestic investors.

“Our mandate is therefore to protect your capital from economic disruptions by deploying collaborative mechanisms, as MDAs, to expedite attention to any concerns that may set you back,” she said.

Col Nakalema encouraged the investors to use the Electronic Investors’ Protection Portal (EIPP), which she said links more than 75 government ministries, departments and agencies and allows investors to verify administrative processes with minimal human contact.

According to Col Nakalema, more than 200 Dutch-affiliated companies operate in Uganda, in sectors including agribusiness, horticulture, floriculture, animal and fish feed manufacturing, aquaculture, renewable energy, and transport and logistics. She said the Netherlands accounted for 58.8 per cent of Uganda’s total foreign direct investment inflows by June 2026.

Moses Kaggwa, Director of Economic Affairs at the Ministry of Finance, Planning and Economic Development, told the meeting that rising fuel prices, tensions in the Middle East and a weakening shilling were putting pressure on the economy. He said he expected the shilling to stabilise at around Shs3,900 to the US dollar in the near term, and assured investors the government was committed to a predictable business environment.

Smeding said the Netherlands was moving from traditional development cooperation towards an investment-oriented relationship with Uganda, in line with its Multiannual Country Strategy for 2026 onwards.

The meeting, coordinated by the Embassy of the Kingdom of the Netherlands, was attended by officials from SHIPU, the Ministry of Finance, URA, the Uganda Free Zones and Export Promotion Authority, the Tax Appeals Tribunal, the International Development Law Organisation and other government institutions.