Parliament kicks off debate on tax bills to finance 2026/27 budget

KAMPALA - Parliament will on Tuesday, April 21, 2006, begin debate on a raft of tax amendment bills that will determine how the government raises domestic revenue to finance the 2026/27 national budget.

The package of tax measures was tabled before Parliament on April 1, 2026, by State Minister for Finance (General Duties) Henry Musasizi during plenary and was subsequently referred to the Finance Committee for scrutiny by Speaker Anita Annet Among.

The committee is expected to present its report to the House before lawmakers proceed with the second reading, committee stage and third reading of the bills.

The proposed measures are projected to raise sh44.5 trillion in domestic revenue as the government seeks to fund the next financial year’s budget while reducing reliance on external borrowing and donor support.

Among the key bills lined up for debate are the Income Tax (Amendment) Bill, Excise Duty (Amendment) Bill, Value Added Tax (Amendment) Bill, Tax Procedures Code (Amendment) Bill, External Trade (Amendment) Bill, Stamp Duty (Amendment) Bill, Traffic and Road Safety (Amendment) Bill, and the Lotteries and Gaming (Amendment) Bill, all for 2026.

Key tax proposals

Under the Income Tax (Amendment) Bill, the government proposes introducing a 0.5 percent Alternative Minimum Tax on gross income for businesses that continue declaring losses for seven consecutive years while remaining operational.

A new 10 percent tax is also proposed on annual employment income exceeding sh120m, targeting higher-income earners.

Other proposed changes include a 5 percent withholding tax on interest paid on foreign loans, a 10 percent withholding tax on commissions earned by telecom agents, mandatory monthly returns for rental income earners instead of quarterly filings, and a 6 percent withholding tax on payments for the purchase of non-business assets.

Under the Excise Duty (Amendment) Bill, the government seeks to impose an additional sh200 levy per litre of petrol and diesel, increase excise duty on cement to sh1,000 per 50kg bag, raise tax on cooking oil to sh400 per litre, impose sh3,500 duty on imported undenatured spirits, and increase motorcycle registration fees from sh200,000 to sh500,000.

The Value Added Tax (Amendment) Bill proposes increasing the VAT registration threshold from sh150m to sh250m in annual turnover, a move intended to ease compliance costs for smaller businesses.

Other VAT-related proposals include a 0.5 percent withholding tax on agricultural supplies worth more than sh1m and a 6 percent withholding tax on payments made to entertainers.

The Finance Committee has in recent days been receiving submissions from the Finance Ministry, Uganda Revenue Authority, private sector players and other stakeholders. Legislators are expected to recommend whether to retain, amend or reject specific clauses before the House considers the bills clause by clause.

A source on the committee said lawmakers are trying to strike a balance between raising revenue and protecting businesses already burdened by high operating costs.

“Members are aware government needs money to fund roads, health, education and security, but they are also concerned about not overburdening taxpayers,” the source said.

Finance Ministry Permanent Secretary Ramathan Ggoobi recently defended the annual tax amendment process, saying it is intended to close loopholes, modernise tax administration and align tax laws with changing economic realities.

“These amendments are not only about raising rates. In many cases, they are about improving compliance, digitising tax administration and ensuring fairness across sectors,” Ggoobi said.

Growing opposition

The proposed measures have already drawn criticism from traders, manufacturers and consumers, who argue that the taxes could worsen the cost of living and slow business activity.

Business associations, including KACITA, have warned that higher levies on fuel, cement and cooking oil are likely to be passed on to consumers through increased prices.
Critics have also raised concern over the Alternative Minimum Tax, saying it could punish genuinely struggling businesses, especially small and medium enterprises still recovering from recent economic shocks.

Tax experts note that amendments to the Tax Procedures Code could have a major impact beyond tax rates themselves.

“Sometimes the biggest impact is not in the tax rate itself, but in how the law is enforced. Administrative changes can affect cash flow and compliance costs for businesses,” Daniel Akol, a Kampala-based tax consultant, said.

Parliament will also consider amendments affecting gaming, external trade and road safety.

Changes to the Lotteries and Gaming law are expected to tighten taxation and regulation of betting companies, while amendments to the Traffic and Road Safety law could revise fees and penalties tied to licensing and road usage.

Some lawmakers have previously argued that the government should meet revenue targets by fighting corruption, widening the tax base and formalising the informal sector rather than increasing pressure on already compliant taxpayers.

If passed, the amendments will take effect at the start of the new financial year on July 1, 2026.