Executive summary

On 10 July 2026, President Yoweri Museveni declined to assent to the Income Tax (Amendment) Bill, 2026 or the Excise Duty (Amendment) Bill, 2026, returning both to Parliament for reconsideration. Deputy Speaker Thomas Tayebwa had communicated the President's reservations to the House during the plenary sitting of 14 July 2026.

The 11th Parliament had already passed both bills, ahead of the 2026/27 budget reading. Following the President's referral, Section 11 of the Income Tax (Amendment) Bill, 2026 and Clause 2(e) of the Excise Duty (Amendment) Bill, 2026 have been recommitted to the Finance Committee for further review before the bills return to the floor.

The President had assented to a broader 2026/27 tax bills package (value-added tax (VAT), Stamp Duty, Tax Procedures Code, Lotteries and Gaming, External Trade, and Traffic and Road Safety amendments), which is already law and is not affected by this specific referral.

Two clauses in question

Each of the two bills at issue contained a clause that the President questioned, as outlined below.

Withholding tax exemption for land-based casino winnings (Income Tax (Amendment) Bill, 2026 Section 11)

The Bill as passed introduces a 15% withholding tax on winnings from betting and gaming activities but carves out an exemption for winnings from land-based casinos licensed under the Lotteries and Gaming Act, 2016. This is reflected in the Income Tax (Amendment) Act, 2026 as Section 11 (Amendment of Section 131 of the Principal Act).

The President objects to exempting one category of gaming operator while taxing others (e.g., online betting/gaming), which he contends creates an uneven playing field and opens the door to tax avoidance and revenue leakage, as operators could restructure transactions to fall within the exempt category.

The President asserts that businesses engaged in substantially similar activities should not receive different tax treatment.

Significant excise duty increase on single-use plastics (Excise Duty (Amendment) Bill, Clause 2(e))

Parliament proposed raising excise duty on single-use plastics from 2.5% or US$70/metric tonne (whichever is higher) to 25% or US$1,500/metric tonne (whichever is higher), roughly a 20-fold increase at the specific-rate floor. This is reflected in the Excise Duty (Amendment) Act, 2026 as Item 11 of Schedule 2.

The President asserts that an increase of this scale could impose significant cost pressure on manufacturers and adversely affect production, investment and employment in the sector, and warrants further study. In addition, viable, cost-competitive alternatives to plastic packaging are not yet readily available in Uganda, making an abrupt increase potentially disruptive to supply chains before substitutes exist.

Legislative process

The two bills and the Amendment Acts as passed by Parliament are not yet law. Only the two clauses discussed above have been sent back and the remainder of each bill is not currently reported as being in dispute. Final enactment of the two bills awaits resolution of these clauses.

The Finance Committee will now rework the affected clauses before the bills return to plenary. Timing for repassage is not yet confirmed, and it cannot be assumed that the current drafts (including the casino exemption and the higher plastics rate) will take effect as originally passed.

Next steps

Affected taxpayers should note that the two bills are not yet enacted for compliance planning purposes. In the meantime, however:

• Gaming and betting operators should consider reassessing withholding tax exposure modeling under both the original Clause 11 exemption and a scenario in which the exemption is removed or narrowed.
• Plastics manufacturers and heavy packaging users should consider avoiding locking in pricing or supply contracts based on the 25%/US$1,500 per metric tonne rate until the recommitted clause is finalized and model a range of outcomes.