Executive summary

The President of the Republic of Uganda on 30 June 2025 assented to enacting several tax amendment Bills into law. The Acts include the Income Tax (Amendment) (No.1) Act, 2025, the Income Tax (Amendment) (No.2) Act, 2025, the Value Added Tax (Amendment) Act, 2025, the Excise Duty (Amendment) (No.1) Act, 2025, the Excise Duty (Amendment) (No.2) Act, 2025, the Stamp Duty (Amendment) Act, 2025 and Tax Procedure Code (Amendment) Act, 2025. The Acts takes effect from 1 July 2025.

This Alert highlights the key amendments with respect to the:

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

Summaries of the key reforms contained in each Act follow.

Income Tax (Amendment) (No.1) and (No.2) Acts, 2025

The key Income Tax reforms include:

Expanded list of exempt income transactions under Section 21 of the Income Tax Act

The amendment expands the list of transactions exempt from income tax by including the following:

• The Act extends the exemption period for the income of Bujagali hydro power project from 30 June 2024 to 30 June 2025 and from 30 June 2025 to 30 June 2026.
• The Act exempts income derived from a business established by a citizen after 1 July 2025 for a period of three years if the:
• Business is registered with an investment capital not exceeding 500 million Ugandan shillings (UGX500m)
• Citizen or their associate has not previously benefited from the exemption
• Citizen files a tax return including business information return referred to in Section 147 of the Income TaxAct (ITA) in the format prescribed by the Commissioner General
• The Act corrects the clerical/textual errors and clarifies the wording in the exemption condition in Section 21(ae)(vii) of the ITA by stating; "manufactures chemicals for agricultural use or industrial use." Additionally, the Act demonstrates that manufacturers of textiles, glassware, leather products, industrial machinery, electrical equipment, sanitary pads and diapers are also exempt.

Amended definition of "reorganization" under roll-over relief regime in Section 76 (4)(a) of the Income Tax Act

The Act expands the definition of "reorganization" by amending subsection 4(a) to include: "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 amendment 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, previously not accounted for in the provision.

Amended digital service tax regime

The Act introduces an exclusion under Section 86(5) and clarifies the interrelationship between Sections 86, 82, and 84 in Section 86(6), as stated below: :

(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 amendment introduces an exemption from the Digital Service Tax (DST) for nonresident entities that provide digital services to their related parties (associates) in Uganda. However, these transactions remain taxable under other provisions of the Income Tax Act Specifically Section 82, which governs international payments, and Section 84, which applies to payments made to nonresident contractors and professionals for services giving rise to income sourced in Uganda. As a result, although the 5% DST may no longer apply in these cases, a 15% withholding tax may still be triggered.

Extended list of Listed Institutions under Second Schedule to the Income Tax Act

The amendment expands 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) Act, 2025

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

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

The amendment adds "United Nations related Agencies and specialised Agencies" to the list of exempt institutions under the Value Added Tax Act.

The amendment replaces the reference to "International Atomic Agency (IAA)" with the correct name "International Atomic Energy Agency (IAEA)."

Expanded exemption list of supplies under schedule 3 of the VAT Act

The Act amends Schedule 3 to the VAT Act as follows:

*The bolded text in this chart is intended for emphasis and was not included in the text of the VAT Act.

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

The Act expands the list of zero-rated supplies under Schedule 4 of the VAT Act to include the supply of aircraft. This amendment addresses a long-standing inconsistency where aircraft leasing was zero-rated, but outright purchases remained subject to VAT. By aligning the tax treatment of leasing and purchasing, the reform promotes fairness, reduces acquisition costs, and is expected to stimulate investment in Uganda's aviation sector.

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

A description of key Excise Duty reforms follow.

Expanded duty remission regime

The amendment introduces a new Section 13A to the Excise Duty Act, providing a framework for the remission of excise duty on goods that are damaged, expired or obsolete. This reform is intended to ensure equitable tax treatment and reduce the compliance burden on affected taxpayers. Under the new provision:

• A person who has paid excise duty may apply to the Commissioner General for the remission of any excise duty paid on damaged, expired or obsolete goods.
• The applicant for remission must present:
• Proof that the duty was paid on damaged, expired or obsolete goods, where applicable
• Documentation demonstrating delivery of goods
• A report indicating the extent and cause of the damage issued by a competent authority, in the case of damaged goods
• Any other document, as the Minister may require by regulations
• If the Commissioner General is satisfied that excise duty was paid on damaged, expired or obsolete goods, the Commissioner General shall either:
• Apply the excise duty paid in reduction of any other duty due from the person liable to pay excise duty
• At the written option of the person liable to pay excise duty, apply the excise duty paid on damaged, expired or obsolete goods to reduce any other outstanding tax liability of the person liable to pay excise duty.

New excise duty rates

The Act amends Schedule 2 to the Excise Duty Act as follows:

Stamp Duty (Amendment) Act, 2025

New stamp duty rates

The Act amends Schedule 2 to the Stamp Duty Act as follows:

Tax Procedures Code (Amendment) Act, 2025

The key Tax Procedures Code reforms include the following.

New taxpayer identification criteria

The amendment Act introduces the following criteria for identifying taxpayers:

1. For individuals, the National Identification Registration Authority will issue a national identification number under the Registration of Persons Act.
2. For non-individuals, the Uganda Registration Services Bureau will issue a registration number
3. A foreign tax authority with which Uganda has a tax treaty or agreement for the exchange of information may also issue a tax identification number.

The Act now provides 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.

Further, the Act now provides 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.

And, the Act now provides that local authorities, government institutions and 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 Act also gives the Minister the authority to establish procedures and requirements for registering non-individual entities and issuing them registration numbers.

Extension of interest and penalty waiver applicable to outstanding principal tax liability

The Act extends the waiver of payment of interest and penalty if the taxpayer voluntarily pays the principal tax outstanding as of 30 June 2024, by 30 June 2026.

The Act maintains the administration of the waiver relief 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.

Amendment to enhance penal tax for noncompliance with electronic fiscal device requirements

The Act amends the penal tax provisions specified under Section 80(2) for taxpayers who fail to use an electronic fiscal device. Previously, the penalty for noncompliance was equivalent to the tax due on the goods or services or UGX8m (approximately US$2,100). The amendment increases the penalty to twice the tax due on the goods or services.

The Act amends the penal tax provisions for taxpayers specified under Section 80(2). Previously, the penalty for failing to issue an e-invoice or e-receipt for goods or services, or for tampering with an electronic fiscal device, was equivalent to the tax due on the goods or services or UGX6m (approximately US$1,600). The amendment increases the penalty to twice the tax due on the goods or services.

Introduction of Gaming and betting centralized payments gateway

The Act inserts Section 93A to include the following language:

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 centralised payments gateway system licensed by the Bank of Uganda under the National Payment Systems Act.
2. The gaming and betting centralised payments gateway system shall be linked to the Uganda Revenue Authority electronic notice system.

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

The Act inserts 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.

Noncompliance with tax-exemption requirements

The Act includes Section 93C, which requires a taxpayer exempted from tax under a tax law to always meet the requirements for the exemption. A taxpayer who fails to comply will be liable to pay the tax due for the period of noncompliance; this obligation must be paid personally by the taxpayer who failed to maintain the exemption requirements.

External Trade (Amendment) Act, 2025

Highlights of key External Trade (Amendment) Act reforms include the following.

New charge on all goods imported into Uganda for home use (Infrastructure levy)

The Act inserts Section 3A, which states as follows:

The Act introduces 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 of the goods for home use.

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).

New Import declaration fee

The Act inserts Section 3B as follows:

The Act introduces 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 are entered for home use into the country. [Emphasis added.]

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
• Plants 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)

Introduction of an export levy on wheat bran, cotton cake and maize bran

The Act inserts Section 4A, which states as follows:

The amendment to the External Trade Act introduces a levy on wheat bran, cotton cake, and maize bran exported from Uganda. The levy, set at USD 10 per metric tonne, must be paid by the consigner to the Uganda Revenue Authority at the time of export. [Emphasis added.]

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

The Act repeals the export levy exemption on the following items previously listed in the Schedule 2 of the Act, which stated:

1. Pickled, partly or wholly tanned hides and skins.
2. Cattle masks, pizzles and sinews.
3. Glue-stock, that is to say, hides or skins which fall within any of the following categories —
1. dry cattle hides (whether suspension or ground dried or dry salted), weighing more than four pounds when air dry, which have been cut into pieces not greater in size than one-quarter of the whole;
2. air-dried sheepskins, goatskins and calfskins (whether suspension or ground dried or dry salted), weighing less than four pounds when air dry, which have been cut transversely from flank edge to flank edge into pieces not greater in size than one-half of the whole;
3. wet salted cattle hides which have been cut into pieces not greater in size than one-quarter of the whole, and which 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 licence 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.

The exportation of the above-listed items will be subject to a levy of US$0.80 per Kilogram.

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

Implications

The recent amendments to the Income Tax Act present could particularly benefit companies in sectors like renewable energy and manufacturing. However, changes to the digital services tax may increase the tax burden for nonresident entities providing digital services to related parties as withholding taxes could still apply.

Multinationals may find it easier to be registered for taxes due to new taxpayer identification criteria and compliance requirements under the Tax Procedures Code.