Business 30 April 2026 Daily Monitor (Uganda)
Strengthened Audits Beat Uganda's Risky Minimum Tax Proposal for Loss-Making Firms
Uganda's proposed 0.5% minimum tax on gross income for companies with prolonged losses could force struggling businesses into cash crunches and closures, unlike Tanzania's balanced approach. Experts advocate for robust audits using EFRIS data as a smarter alternative to preserve investment appeal. Source: https://www.monitor.co.ug/uganda/oped/commentary/strengthened-audits-are-a-targeted-and-economically-sound-solution-5442048
Uganda’s tax system traditionally taxes profits, sparing loss-making businesses until they recover. Recent changes limit loss carry-forwards to seven years, after which half are forfeited.
The 2026 Income Tax Amendment Bill introduces a 0.5% minimum alternative tax (MAT) on gross income for firms still carrying losses beyond that period. This could tax revenue even for unprofitable companies, like one with Shs10 billion in sales but massive accumulated losses, triggering a Shs57.5 million payment despite ongoing deficits.
Such a levy hits cash-strapped sectors like infrastructure, agroforestry, education, and healthcare hard, potentially accelerating shutdowns and eroding other tax revenues like PAYE and VAT. It risks deterring investment in key growth areas.
Tanzania offers a better model: a 1% tax on turnover for three straight loss years, but with indefinite loss carry-forwards capped at 60% of profits. Uganda’s plan adds a double hit—loss forfeiture plus gross income tax.
With EFRIS providing rich data and URA’s audit powers growing, targeting audits at suspect loss-makers is a precise, economy-friendly fix over broad penalties.
Source: Daily Monitor (Uganda)