Executive summary

The Uganda Minister of Finance Planning and Economic Development, on 27 March 2025, tabled Tax Amendment Bills, 2025 (the Bills) before Parliament for debate. If passed into law by the Parliament and assented to by the President of the Republic of Uganda, the Bills will take effect from 1 July 2025.

This Alert highlights the key proposals with respect to the:

• Income Tax (Amendment) (No.2) Bill, 2025
• Value Added Tax (Amendment) Bill, 2025
• Excise Duty (Amendment) (No.1) & (No.2) Bill, 2025
• Stamp Duty (Amendment) Bill, 2025
• Tax Procedure Code (Amendment) Bill, 2025
• External Trade (Amendment) Bill, 2025
• Hides and Skins (Export Duty) (Amendment) Bill, 2025

Key reforms contained in each bill are summarized below.

Income Tax (Amendment) (No.2) Bill, 2025

The key Income Tax reforms proposed include the following.

Expands list of exempt income under Section 21 to the Income Tax Act

The bill proposes extending the exemption period for the income of Bujagali hydro power project from 30 June 2024 to 30 June 2032.

The bill proposes a three-year exemption for income derived from a business established by a citizen after 1 July 2025, if:

• The business is registered with an investment capital not exceeding five hundred million shillings.
• The citizen or their associate has not previously benefited from the exemption; and
• The citizen files a tax return that includes business information return referred to in Section 147 of this Act in the format prescribed by the Commissioner General.

The bill aims to remedy clerical/textual errors and to clarify the wording in Section 21(ae)(vii) of the Income Tax Act by clarifying the exemption condition regarding "manufactures chemicals for agricultural use or industrial use." Additionally, it seeks to demonstrate that manufacturers of textiles, glassware, leather products, industrial machinery, electrical equipment, sanitary pads and diapers are also exempt.

Amends definition of "reorganization" under the "Roll-over relief" regime in Section 76 (1)(a) in Income Tax Act

The bill proposes to expand the definition of "reorganization" by amending subsection (a) to include the following: "a transaction in which a person transfers their assets to another person, other than an individual controlled by the transferor or the shareholders, following which the stock of the transferee is distributed." This proposal broadens the scope of reorganization to encompass transfers made by individuals to corporate entities.

Additionally, it expands the definition to include transfers between various corporate entities, such as trusts, retirement funds, government bodies, political subdivisions of government and listed institutions, among others, not currently accounted for in the provision.

Amends digital service tax regime

The bill proposes to introduce to an exclusion to the application of Section 86 in subsection 5 and a clarification of the interrelationship between Section 86, 82 and 82 in subsection 6 as follows:

(5) That Section 86 that deals with the taxation of non-residents providing digital services shall not apply where a non-resident person is deriving income from providing digital services in Uganda to an associate in Uganda.

(6) Notwithstanding subsection (5), section 82 or 84 of this Act shall apply to the income of a non-resident person derived from providing digital services in Uganda to an associate in Uganda.

The proposal introduces an exclusion from the digital service tax for nonresident persons providing digital services in Uganda to their associates but clarifies that these transactions will be taxed in accordance with Section 82, which pertains to international payments, or Section 84, which relates to payments to nonresident contractors and professionals from Uganda-sourced services contracts.

Extends list of Listed institutions under the Second Schedule to the Income Tax Act

The bill proposes to expand the list of exempt institutions under the Second Schedule to the Income Tax Act by adding:

• International Atomic Energy Agency (IAEA)

Value Added Tax (Amendment) Bill, 2025

The key Value Added Tax (VAT) reforms proposed include the following.

Broadens the Anti-tax avoidance mechanisms under Section 47(1) of the VAT Act

The bill proposes to extend the Commissioner's discretionary powers in anti-avoidance scenarios to cases where an importer has entered into or carried out a scheme involving the importation of goods under separate consignments, which if aggregated, would qualify the importer for registration under the Act.

The Commissioner General would have the authority to aggregate the split transactions for purposes of determining whether a taxpayer meets the criteria for VAT registration under the Act.

Extends the list of exempted institutions under the Second Schedule to the VAT Act

The proposal seeks to add "United Nations related Agencies and specialized Agencies" as exempt institutions.

Further, the bill proposes to substitute "International Atomic Energy Agency (IAEA)" for the words "International Atomic Agency (IAA)."

Expands the exemption list of supplies under Schedule 3 of the VAT Act

The bill proposes to amend Schedule 3 to the VAT Act as follows (bold text indicates where changes would occur):

Expands the list of Zero-Rated Supplies under the fourth Schedule of the VAT Act

The bill seeks to expand the list of zero-rated supplies by adding the supply of aircraft.

Excise Duty (Amendment) (No.1) and (No.2) Bill, 2025

The key Excise Duty reforms proposed include those highlighted below.

Expand the duty remission regime

The bill proposes to introduce Section 13A, which entails the following:

• A person liable to pay excise duty may apply to the Commissioner for the remission of any excise duty paid on damaged, expired or obsolete goods.
• The Applicant for remission must present the following, as applicable:
• Proof that the duty was paid on damaged, expired or obsolete goods, where applicable
• Documentation demonstrating delivery of goods
• A report, issued by a competent authority, indicating the extent and the cause of damage to any damaged goods
• Any other document as the Minister may determine by regulations
• If the Commissioner is satisfied that excise duty was paid on damaged, expired or obsolete goods, the Commissioner shall either:
• Credit the excise duty paid to reduce any other duty due from the person liable to pay excise duty
• At the written option of the person liable to pay excise duty, credit the excise duty paid on damaged, expired or obsolete goods to reduce any other taxes not in dispute that are owed by the person liable to pay excise duty

Introduces new excise duty rates

The bill proposes to amend Schedule 2 to the Excise Duty Act as follows:

*UGX is an abbreviation for the Ugandan shilling.

Stamp Duty (Amendment) Bill, 2025

Introduction of new stamp duty rates

The bill proposes to amend Schedule 2 to the Stamp Duty Act as follows:

Tax Procedures Code (Amendment) Bill, 2025

The key Tax Procedures Code reforms proposed include the following.

Introduces a new Tax Identification Number

The bill seeks to introduce new Tax Identification Number, expressly stating as follows:

1. a national identification number issued by the National Identification Registration Authority under the Registration of Persons Act, in the case of an individual;
2. a registration number issued by the Uganda Registration Services Bureau, in the case of a person who is a non-individual; and
3. a tax identification number issued by a foreign tax authority with whom Uganda has a tax treaty or agreement for the exchange of information.

The bill proposes that the Uganda Registration Services Bureau shall establish and maintain a centralized register of all non-individual entities registered, incorporated or carrying on business in Uganda.

The bill proposes that no local authority, government institution or regulatory body shall issue a license or authorization for conducting business in Uganda to any person without a national identification number, registration number or a tax identification number from a foreign tax authority with which Uganda has a tax treaty or agreement for information exchange.

The bill proposes that local authorities, government institutions or regulatory bodies shall not register any instrument requiring stamp duty unless the person lodging the instrument provides a national identification number (for individuals), a registration number (for non-individuals) or a tax identification number from a foreign tax authority with which Uganda has a tax treaty or agreement for the exchange of information.

The bill further proposes to give the Minister the authority to establish procedures and requirements for registering non-individual entities and issuing them registration numbers.

Waives interest on payment of principal tax

The bill proposes to waive the payment of interest and penalties if the taxpayer voluntarily pays the principal tax outstanding as of 30 June 2024, by 30 June 2026.

The bill further proposes to waive the payment of interest and penalties by a taxpayer on a pro-rata basis, where the taxpayer voluntarily pays part of the principal tax outstanding as of 30 June 2024, by 30 June 2026.

Amends enhanced penal tax for noncompliance with electronic fiscal device requirements

The bill proposes to amend the penal tax provisions for taxpayers specified under Section 80(2) of the Act who fail to use an electronic fiscal device. Currently, the penalty for noncompliance is equivalent to the tax due on the goods or services or UGX8m (approximately US$2,100). The proposed amendment seeks to increase the penalty to twice the tax due on the goods or services.

The bill proposes to amend the penal tax provisions for taxpayers specified under Section 80(2) of the Act. Currently, the penalty for failing to issue an e-invoice or e-receipt for goods or services, or for tampering with an electronic fiscal device, is equivalent to the tax due on the goods or services or UGX6m (approximately US$1,600). The proposed amendment seeks to increase the penalty to twice the tax due on the goods or services.

Introduces gaming and betting centralized payments gateway

The bill proposes to insert A93A to include:

1. An operator of a casino, gaming or betting activity shall only receive a wager or money staked and only make payouts through the gaming and betting centralized payments gateway system licensed by the Bank of Uganda under the National Payment Systems Act.
2. The gaming and betting centralized payments gateway system shall be linked to the Uganda Revenue Authority electronic notice system.

Introduces penal tax relating to gaming and betting centralized payments gateway system

The bill proposes to insert Section 93B to include an operator of a casino, gaming or betting activity who does not use or is not integrated with the gaming and betting centralized payments gateway system is liable to pay a penal tax equivalent to double the gaming or withholding tax due or UGX110m (approx. US$31,100), whichever is higher.

Adds consequences for noncompliance with requirements for tax exemption

The bill proposes to include Section 93C which requires that a taxpayer exempted from tax under a tax law must always maintain the requirements needed for the exemption, and if the taxpayer fails to comply, they will be liable to pay the tax due for the period of noncompliance, which must be paid personally by the taxpayer who failed to maintain the exemption requirements.

External Trade (Amendment) Bill, 2025

The key External Trade (Amendment) Bill proposed reforms would make the following changes.

Introduces a charge on all goods imported into the country for home use (Infrastructure levy)

The proposed bill would add Section 3A, introducing an infrastructure levy of 1.5% on all goods imported for home use in Uganda. This levy is based on the customs value of the goods and must be paid by the importer at the time of entry.

Exemptions to this levy include:

• Goods and products listed in the Fifth Schedule of the East African Community Customs Management Act, 2004
• Plant and machinery specified under chapters 84 and 85 of the East African Community Common External Trade harmonized commodity description and coding system
• Goods under a special operating framework with the Government of Uganda, as detailed in the approved measures on import duty rates in the East African Community Common External Tariff (EAC CET)

Introduces an import declaration fee

The bill proposes to insert Section 3B to introduce an import declaration fee of 1% of the customs value on all goods imported for home use. This fee must be paid by the importer when the goods enter the country.

However, the following are exempt from this fee:

• Goods and products listed in the Fifth Schedule of the East African Community Customs Management Act, 2004
• Plant and machinery specified under chapters 84 and 85 of the East African Community Common External Trade harmonized commodity description and coding system
• Goods under a special operating framework with the Government of Uganda, as specified in the approved measures on import duty rates in the East African Community Common External Tariff (EAC CET)

Introduces an export levy on wheat bran, cotton cake and maize bran

The bill proposes to insert Section 4A, introducing a levy on wheat bran, cotton cake, and maize bran exported from Uganda. The consigner must pay the levy, set at US$10 per metric tonne, to the Uganda Revenue Authority at the time of export.

Hides and Skins (Export Duty) (Amendment) Bill, 2025

The bill proposes to repeal/remove export levy exemption on the following items currently listed in the Schedule 2 of the Act:

1. Pickled, partly or wholly tanned hides and skins
2. Cattle masks, pizzles and sinews
3. Glue-stock — i.e., hides or skins which fall within any of the following categories:
   • Dry cattle hides (whether suspension or ground dried or dry salted), weighing more than four pounds when air dry, that have been cut into pieces not greater in size than one-quarter of the whole
   • Air-dried sheepskins, goatskins and calfskins (whether suspension or ground dried or dry salted), weighing less than four pounds when air dry, that have been cut transversely from flank edge to flank edge into pieces not greater in size than one-half of the whole
   • Wet salted cattle hides that have been cut into pieces not greater in size than one-quarter of the whole and that carry a certificate by the exporter that they are glue-stock within the meaning of this item
4. Any game hide obtained by any person under a license issued to him or her under the Game (Preservation and Control) Act, where that person satisfies the chief game warden that the game hide is not intended to be sold and obtains from the chief game warden a certificate to that effect

If enacted, the exportation of the above items will be subject to a levy of US$0.80 per kilogram.

The Bill proposes to eliminate the minister's discretionary authority to amend list of hide and skin items exempt from export duty.

Implications

These reforms could increase the cost of importing goods into Uganda, potentially impacting supply-chain decisions and pricing strategies for multinational enterprises. Additionally, the export levy may affect the profitability of exporting certain agricultural products from Uganda.