The Government of Uganda, through the Ministry of Finance, Planning and Economic Development (MoFPED), is preparing a new set of tax measures for the Financial Year 2026/2027 aimed at raising an additional Shs4.8 trillion in domestic revenue. The proposed measures are part of efforts to support a projected national budget of about Shs78.2 trillion and reduce reliance on borrowing under the country’s Tenfold Growth Strategy.
According to media reports and preliminary briefings, about Shs2.3 trillion of the targeted revenue is expected to come from policy reforms such as new or adjusted taxes, while the remaining amount will be generated through improved administrative and compliance measures by the Uganda Revenue Authority (URA). The proposals are still under internal discussions and stakeholder consultations and have not yet been formally presented to Parliament, meaning some details could change before the final budget is tabled.
One of the major proposals focuses on income tax reforms aimed at increasing progressivity in the tax system. Government is considering introducing a new Pay As You Earn (PAYE) top bracket of 40 percent on monthly salaries exceeding Shs10 million, up from the current maximum rate of 30 percent. At the same time, the tax-free income threshold could be raised from Shs235,000 to Shs335,000 per month, which would be the first increase in more than a decade. Other potential adjustments include reviewing tax exemptions for startups, tightening withholding taxes on certain payments such as royalties, and aligning incentives with priority economic sectors.
Excise duty increases on fuel and consumables are also among the most discussed proposals due to their direct impact on household expenses. Government is considering increasing excise duty on petrol and diesel by Shs200 per litre, a move expected to generate about Shs450 billion but likely to push up pump prices and transport costs. Alcohol and tobacco products could face significant tax hikes, including increasing excise duty on spirits and wines from 60 percent to 80 percent, along with adjustments on beer and cigarettes aimed at discouraging consumption while raising health-related revenue.
Other goods under consideration for higher taxes include sugar, cooking oil, and certain construction materials such as paints and tiles. Authorities are also exploring adjustments to motorcycle registration fees and levies on selected industrial and commercial items, as part of a broader strategy to expand the tax base.
Land and property-related taxes are also being discussed, with possible new levies or adjustments expected to focus on commercial and investment properties while exempting inherited land and owner-occupied homes. Government is also continuing efforts to formalize sections of the informal economy, including artisanal mining, while improving tax compliance through digital systems such as EFRIS. In addition, authorities are reviewing digital and non-resident taxation to build on earlier reforms that shifted from a 5 percent digital services tax to a 15 percent withholding tax on non-resident digital service income.
The proposed measures come as Uganda seeks to increase its domestic revenue collection, which currently stands at about 14.3 percent of GDP. Government aims to raise this level to support infrastructure development, oil-related projects, education, health services, and climate action initiatives. Oil production expected to begin in 2026 is projected to generate around Shs3.67 trillion in its first year, but officials say domestic revenue reforms are necessary to bridge immediate financing gaps.
While government officials argue that the tax proposals will strengthen fiscal sustainability and support long-term economic growth, critics warn that higher taxes on fuel and essential goods could increase the cost of living and fuel inflation. Civil society organizations and private sector groups have called for more progressive taxation, better management of tax incentives, and stronger support for small and medium enterprises to ensure economic growth is not undermined.
The full details of the proposed tax measures are expected to emerge during the national budget presentation in June, when Parliament will debate and possibly amend the tax bills. Government has emphasized that stakeholder consultations are ongoing to balance revenue generation with economic fairness and growth, and some proposals could be revised before final approval.
Overall, the planned tax reforms signal Uganda’s continued push toward self-reliance in financing development through domestic revenue, although the final outcome will depend on parliamentary debate and public feedback in the coming months.
