Uganda Income Tax (Amendment) Bill, 2026: Key Tax Changes Businesses Need to Know
Parliament approves significant tax amendments affecting employment income, gaming, foreign lending, and withholding tax obligations effective 1 July 2026.
Uganda’s Parliament passed the Income Tax (Amendment) Bill, 2026 in April 2026, introducing several significant tax changes aimed at enhancing revenue collection and strengthening tax administration for the 2026/27 financial year.
The amendments, which are expected to take effect on 1 July 2026, impact employment income taxation, withholding tax obligations, gaming and betting taxation, foreign lending arrangements, and tax compliance requirements.
Key Highlights of the 2026 Tax Amendments
Increase in PAYE Tax-Free Threshold
The monthly PAYE tax-free threshold has increased from UGX 235,000 to UGX 335,000, equivalent to approximately UGX 4.02 million annually. The adjustment is intended to reduce the tax burden on lower-income earners.
6% Withholding Tax on Entertainers
A new 6% withholding tax has been introduced on gross payments made to public entertainers as part of efforts to improve compliance within the entertainment industry.
5% Tax on Interest Paid to Foreign Lenders
Interest payments made by Ugandan companies to non-resident or foreign lenders will now attract a 5% withholding tax.
Gaming & Betting Tax Changes
The tax rate applicable to gaming and betting winnings has been harmonized at 30% of winnings.
Tax Waivers & Compliance Penalties
The amendments propose a waiver of interest and penalties on taxes outstanding as of 30 June 2016 if still unpaid by 1 July 2026. Additionally, penalties equal to double the tax due may apply for failure to use electronic fiscal devices.
Proposals Rejected by Parliament
Parliament rejected proposals to introduce tax on loss-making companies and also declined the proposed capital gains tax on the sale of personal assets such as land and jewelry.
Business Implications
The amendments are expected to have significant implications for employers, financial institutions, entertainment businesses, gaming operators, investors, and taxpayers generally. Organizations should review their tax compliance processes, payroll structures, withholding tax obligations, and reporting systems to ensure readiness for implementation.
“Effective tax compliance and proactive planning remain essential for organizations navigating Uganda’s evolving tax environment.”