economy 3 June 2026 The Observer (Uganda)
Uganda's New Tax Regime: What to Expect on Your Wallet
Uganda's government is rolling out new taxes effective July 1, 2026, aimed at boosting domestic revenue. The changes are expected to impact everyday expenses like fuel, sugar, and construction, while offering some relief to small businesses and lower-income earners. Source: https://observer.ug/news/how-new-taxes-will-hit-you
Ugandans are bracing for significant shifts in their daily expenses as the government introduces a new tax package designed to increase domestic revenue collection for the 2026/27 financial year. These changes, moving from parliamentary discussions to real-world impact, will be felt at the fuel pump, the market, and in business operations.
A key measure is a new Shs 200 levy on every litre of fuel. While the government suggests this increase is modest, economists and businesses foresee ripple effects across transportation costs, food prices, and general logistics, impacting everything from school runs to the movement of goods.
Further impacting household budgets, the excise duty on sugar is set to rise substantially from Shs 100 to Shs 300 per unit. Cement will also see a new tax of Shs 750 per 50kg bag, potentially affecting construction costs for individuals building homes incrementally. Higher taxes are also slated for imported spirits and motorcycle registrations, with new riders facing a jump from Shs 200,000 to Shs 500,000.
However, the tax changes are not entirely restrictive. The VAT registration threshold has been doubled to Shs 300 million in annual turnover, offering a compliance reprieve for many small and medium-sized enterprises. Additionally, individuals earning up to Shs 335,000 per month are now exempt from Pay As You Earn (PAYE) deductions, providing relief for lower-income salary earners.
High earners will see a new 10% surcharge on incomes exceeding Shs 120 million annually, alongside the existing 40% PAYE rate for those earning over Shs 10 million monthly. The tourism sector also sees a reduced investment threshold for hotel developers, aiming to stimulate growth.
Other measures include a 6% withholding tax on public entertainers and an increased withholding tax on betting and gaming winnings from 20% to 30%. A contentious 30% tax on second-hand clothes has also been approved, a move intended to support the local textile industry but raising concerns about affordability for many.
These adjustments reflect Uganda’s need to bolster its finances amidst tightening external financing and rising debt pressures. The challenge lies in balancing revenue generation with the economic realities faced by citizens and businesses, ensuring that increased taxation translates into tangible public services and economic opportunities.
Source: The Observer (Uganda)