Table of Contents
- Introduction: Why Uganda’s 2025 Tax Reforms Matter
- Overview of Uganda’s Current Tax System
- Key Tax Law Changes for 2025
- Major Tax Rates: Income, VAT, and Corporate Tax Explained
- Compliance and Reporting Requirements for Businesses
- Tax Authority Oversight: Uganda Revenue Authority Updates
- Critical Tax Incentives and Exemptions in 2025
- Key Statistics: Revenue, Collection, and Enforcement Trends
- Projected Tax Policy Shifts for 2026–2030
- Resources, Guidance, and Official Contacts
- Sources & References
Introduction: Why Uganda’s 2025 Tax Reforms Matter
Uganda’s tax landscape is undergoing significant transformation as the nation positions itself for sustainable economic growth and fiscal resilience in 2025 and beyond. The government’s commitment to domestic resource mobilization is evident through a series of tax reforms designed to broaden the tax base, enhance compliance, and reduce reliance on external borrowing. These reforms are particularly critical given Uganda’s ambitious development agenda, including infrastructure investment, social service expansion, and realization of the Vision 2040 strategic framework.
Tax revenue remains a central pillar of Uganda’s public finance. In the fiscal year 2023/2024, domestic revenue was projected to account for approximately 15.6% of GDP, with tax revenue forming the bulk of this figure. Despite improvements, the tax-to-GDP ratio remains below the Sub-Saharan African average, prompting the government to intensify efforts to close the gap in 2025 through legislative and administrative changes Uganda Revenue Authority.
Key events shaping the 2025 tax reforms include the continued implementation of the Tax Procedures Code (Amendment) Act and the introduction of new digital tools for tax administration. The Uganda Revenue Authority (URA) has prioritized e-invoicing, digital tax stamps, and expanded use of the Electronic Fiscal Receipting and Invoicing Solution (EFRIS), aiming to curb tax evasion, increase transparency, and improve collection efficiency. In addition, the government is advancing the rollout of the Domestic Revenue Mobilisation Strategy (DRMS) 2019/20–2023/24, with a renewed focus for the years ahead Ministry of Finance, Planning and Economic Development.
Compliance remains a challenge, with the informal sector estimated to account for over 50% of economic activity. The 2025 reforms target increased registration, simplified tax procedures for small businesses, and stricter enforcement measures. Amendments to VAT, income tax, and excise duty laws are anticipated to clarify obligations and close loopholes, while ongoing education and stakeholder engagement campaigns seek to foster a culture of voluntary compliance Uganda Revenue Authority.
Looking ahead, Uganda’s tax reforms are expected to reshape the fiscal environment, support service delivery, and enhance investor confidence. As the government balances revenue needs with economic competitiveness, the trajectory of tax policy in 2025 will play a pivotal role in shaping Uganda’s medium-term economic outlook.
Overview of Uganda’s Current Tax System
Uganda’s tax system in 2025 is governed primarily by the Income Tax Act Cap. 340, the Value Added Tax Act Cap. 349, and various excise and customs laws, all administered by the Uganda Revenue Authority (URA). The tax regime is structured to mobilize domestic revenue, support socio-economic development, and align with regional integration commitments, notably the East African Community (EAC) protocols.
The major taxes in Uganda include:
- Income Tax: This covers individuals, corporations, and partnerships. For individuals, tax rates range from 10% to 40%, with resident companies taxed at a flat rate of 30%. Withholding taxes are applied on dividends, interest, and other payments.
- Value Added Tax (VAT): VAT is levied at a standard rate of 18% on most goods and services, with some exemptions for essential items and exports.
- Excise Duty: Excise duties are imposed on specific goods such as fuel, alcohol, tobacco, and telecommunications services.
- Customs Duties: Customs duties are charged on imports and exports, largely harmonized within the EAC Common External Tariff.
In 2025, compliance continues to be a central focus, with the URA intensifying digitalization efforts. The rollout of the Electronic Fiscal Receipting and Invoicing Solution (EFRIS) has expanded, making e-invoicing mandatory for VAT-registered businesses and enabling real-time tax monitoring (Uganda Revenue Authority). Additionally, the Tax Procedures Code (Amendment) Act 2024 introduced stricter penalties for late filing and non-compliance, reinforcing taxpayer obligations.
According to the Ministry of Finance, Planning and Economic Development, domestic revenue is projected to reach UGX 32.3 trillion in the 2024/25 fiscal year, representing approximately 14% of GDP. This is part of a multi-year strategy to increase the tax-to-GDP ratio to at least 18% by 2027. Key drivers include broadening the tax base, improving administrative efficiency, and targeting the informal sector.
Looking ahead, tax policy in Uganda will likely emphasize further integration of digital tax systems, enhanced compliance mechanisms, and continued alignment with EAC fiscal frameworks. The government aims to balance revenue mobilization with economic growth and social equity, suggesting potential adjustments in tax rates, exemptions, and enforcement strategies in the coming years.
Key Tax Law Changes for 2025
Uganda’s tax landscape in 2025 is shaped by a series of legislative amendments and policy shifts introduced through the annual Finance Act, as well as ongoing efforts by the government to enhance domestic revenue mobilization and fiscal sustainability. The key tax law changes for 2025 reflect priorities around broadening the tax base, improving compliance, and aligning with regional and international tax standards.
- Income Tax Adjustments: The Finance Act, 2024 (effective from July 1, 2024), introduced several changes impacting the 2025 tax year. Notably, the withholding tax rate on payments to non-resident service providers was adjusted, and the definition of “business income” was broadened to include digital and remote services. These changes are expected to bolster revenue collection from the growing digital economy (Uganda Revenue Authority).
- VAT on Digital Services: Building on previous reforms, Uganda continues to enforce Value Added Tax (VAT) obligations on non-resident suppliers of electronic and digital services. The registration threshold and compliance mechanisms have been clarified to ensure foreign digital platforms account for and remit VAT on sales to Ugandan consumers (Uganda Revenue Authority).
- Excise Duty Revisions: Excise tax rates and coverage have been revised for 2025, particularly affecting telecommunications, alcoholic beverages, and fuel products. The changes aim to balance revenue needs with the cost-of-living concerns and competitiveness of Ugandan businesses (Ministry of Finance, Planning and Economic Development).
- Transfer Pricing and Anti-Avoidance: Uganda has enhanced its transfer pricing documentation requirements to align with international best practices, targeting profit shifting by multinational enterprises. Penalties for non-compliance have also been increased, reinforcing the Uganda Revenue Authority’s (URA) audit capabilities (Uganda Revenue Authority).
- Tax Administration and Compliance: The URA continues to digitize tax administration, requiring more businesses to use electronic fiscal devices and expanding e-filing systems. This is part of a broader strategy to improve taxpayer compliance and reduce leakages (Uganda Revenue Authority).
Looking ahead, Uganda’s tax policy outlook for the next few years involves ongoing reviews of tax incentives, greater focus on taxing the informal sector, and further harmonization with East African Community tax frameworks. The government’s medium-term goal is to raise the tax-to-GDP ratio from the current 14% toward the regional average of 18% (Ministry of Finance, Planning and Economic Development).
Major Tax Rates: Income, VAT, and Corporate Tax Explained
Uganda’s tax regime is administered primarily by the Uganda Revenue Authority (URA) and is governed by several statutes, notably the Income Tax Act, the Value Added Tax Act, and the Tax Procedures Code Act. As of 2025, the tax structure encompasses a range of direct and indirect taxes, with amendments periodically introduced through the annual Finance Acts.
- Income Tax: The individual income tax rates are progressive, ranging from 10% to 40%. Resident individuals are taxed as follows: the first UGX 2,820,000 (annual) is exempt, income between UGX 2,820,001 and UGX 4,020,000 is taxed at 10%, UGX 4,020,001 to UGX 4,920,000 at 20%, and income above UGX 4,920,000 at 30%. An additional 10% is levied on employment income exceeding UGX 120,000,000 per annum, effectively creating a top marginal rate of 40% for high earners. Non-residents pay a flat rate of 30% on income sourced from Uganda. These brackets and rates are stipulated under the Income Tax Act (Cap 340).
- Corporate Tax: The standard corporate income tax rate remains at 30% of taxable profits for resident companies. Branches of foreign companies (permanent establishments) are also subject to the 30% rate. Certain sectors, such as mining or petroleum, may face variable rates or ring-fenced regimes under sector-specific legislation. Capital gains are generally included in taxable income and subject to the same 30% rate. Tax incentives exist for priority sectors, including manufacturing and agro-processing, subject to compliance with investment licensing requirements by the Uganda Investment Authority.
- Value Added Tax (VAT): VAT is charged at a standard rate of 18% on the supply of most goods and services, as provided by the Value Added Tax Act (Cap 349). Supplies such as unprocessed foodstuffs, health, and educational services are exempt or zero-rated. Businesses with annual taxable turnover above UGX 150 million are required to register for VAT. The URA has increasingly adopted digital systems to enforce VAT compliance, including electronic invoicing mandates for larger businesses.
As of 2025, tax compliance is a national priority, with URA intensifying audits and leveraging technology to expand the tax base. Key statistics indicate that tax-to-GDP ratio continues to hover around 13-14%, reflecting ongoing efforts to enhance domestic revenue mobilization for the government’s Vision 2040 and National Development Plan III objectives (Uganda Revenue Authority). Over the next few years, further reforms and digitalization are expected, with policy attention on increasing efficiency, broadening the tax net, and aligning tax incentives with national development priorities.
Compliance and Reporting Requirements for Businesses
In 2025, compliance and reporting requirements for businesses in Uganda continue to be governed primarily by the Income Tax Act, Cap. 340, the Value Added Tax Act, Cap. 349, and various statutory instruments issued by the Uganda Revenue Authority (URA). The URA is the principal body responsible for tax administration, compliance enforcement, and taxpayer education.
- Registration and Tax Identification: All businesses must register with the URA and obtain a Taxpayer Identification Number (TIN) before commencing operations. This is required for filing returns, accessing e-services, and obtaining licenses. The URA has streamlined the TIN application process through its online portal, further encouraging compliance (Uganda Revenue Authority).
- Corporate Income Tax Filing: Resident companies are taxed on worldwide income at a standard rate of 30%. Annual income tax returns must be submitted within six months after the end of the company’s financial year. Payment of provisional tax is also required in two installments during the year, with final tax due upon filing (Uganda Revenue Authority).
- Value Added Tax (VAT): Businesses with annual taxable turnover exceeding UGX 150 million must register for VAT. VAT returns are filed monthly, and tax is payable by the 15th day of the following month. Businesses not meeting the threshold may register voluntarily. Compliance is monitored via electronic fiscal devices and e-invoicing, increasingly mandated in 2025 to curb underreporting (Uganda Revenue Authority).
- Withholding Taxes: Companies are required to withhold tax on various payments, including interest, dividends, and payments to non-residents, and remit these to the URA. Monthly withholding tax returns are compulsory (Uganda Revenue Authority).
- PAYE and Social Security: Employers must deduct Pay As You Earn (PAYE) tax from employee salaries and remit this monthly. Social security contributions to the National Social Security Fund (NSSF) must also be reported and paid (National Social Security Fund).
- Penalties and Enforcement: Failure to file and pay taxes on time attracts interest and penalties. The URA employs risk-based audits, data matching, and digital tracking to enhance compliance. Recent initiatives include mandatory use of the EFRIS (Electronic Fiscal Receipting and Invoicing Solution), expected to become universal by 2025 (Uganda Revenue Authority).
Looking ahead, the government is prioritizing digitization, expanding the tax base, and stricter enforcement, with a focus on integrating compliance systems and reducing manual interventions. These reforms are expected to increase transparency, reduce evasion, and improve Uganda’s tax-to-GDP ratio in the coming years.
Tax Authority Oversight: Uganda Revenue Authority Updates
The Uganda Revenue Authority (URA) remains the principal government agency responsible for assessing, collecting, and enforcing tax laws in Uganda. In recent years, the URA has intensified efforts to enhance revenue collection, bolster compliance, and modernize tax administration, with significant implications for the 2025 fiscal year and beyond.
A notable development in 2024 was the operationalization of the Electronic Fiscal Receipting and Invoicing Solution (EFRIS), a digital system designed to reduce value-added tax (VAT) evasion and improve transparency in business transactions. By mandating businesses to issue electronic receipts and invoices, the URA aims to widen the tax net and ensure real-time monitoring of taxable transactions. Compliance with EFRIS is now a legal requirement for VAT-registered businesses, and the URA has undertaken extensive taxpayer education campaigns to facilitate adoption Uganda Revenue Authority.
For the 2024/2025 budget, the URA targets an ambitious revenue collection of UGX 29.7 trillion, up from UGX 25.2 trillion in the previous year. This increase is driven by tax policy reforms, broadening of the tax base, and enhanced enforcement measures. Key taxes under URA oversight include income tax, VAT (currently at 18%), excise duty, and customs duties. Recent amendments to the Income Tax Act and the Tax Procedures Code have introduced stricter penalties for non-compliance and more robust mechanisms for dispute resolution Ministry of Finance, Planning and Economic Development.
The URA has also prioritized digital transformation. The introduction of online taxpayer registration, electronic filing, and digital payment platforms has significantly reduced administrative bottlenecks and improved service delivery. The authority’s digital strategy supports the government’s broader goal of increasing the tax-to-GDP ratio, currently at approximately 14%, with a medium-term target of 18% Uganda Revenue Authority.
Looking ahead to 2025 and subsequent years, URA intends to intensify compliance audits, expand the use of data analytics, and collaborate with regional and international bodies to combat cross-border tax evasion. Proactive stakeholder engagement and legislative updates are expected to further align Uganda’s tax system with international best practices, ensuring sustainable revenue mobilization for national development.
Critical Tax Incentives and Exemptions in 2025
In 2025, tax incentives and exemptions remain a cornerstone of Uganda’s fiscal policy, targeting both domestic and foreign investors to stimulate economic growth and job creation. The legal framework for such incentives is primarily outlined in the Income Tax Act, the Value Added Tax (VAT) Act, and sector-specific legislation. The Uganda Revenue Authority (URA) administers these provisions, with ongoing reforms to ensure compliance and plug revenue leakages.
Key tax incentives in effect for 2025 include exemptions on income tax for investments in strategic sectors such as agriculture, manufacturing, and information and communications technology. For example, qualifying investors in manufacturing who invest at least USD 10 million (foreigners) or USD 1 million (citizens) outside Kampala, Wakiso, and Mukono are eligible for a 10-year income tax exemption. Similar incentives apply to agro-processing and the development of industrial parks. To further encourage infrastructure development, capital allowances of up to 50% are available for plant and machinery, and up to 20% for industrial buildings in the first year of use. Additionally, imported plant and machinery for manufacturing are exempted from import duties under the East African Community Customs Management Act.
VAT exemptions in 2025 extend to unprocessed agricultural produce, educational materials, and some medical and pharmaceutical products. Notably, solar energy equipment and related accessories remain VAT-exempt to support Uganda’s energy transition goals. The government has also maintained VAT zero-rating for certain exports to enhance competitiveness.
Compliance with tax incentive conditions is strictly monitored by the URA, with regular audits and sector reviews. The URA has intensified digitalization initiatives, including e-invoicing and the use of the Digital Tax Stamps system, to improve transparency and minimize abuse of exemptions. In 2023/24, the URA reported that tax expenditures—revenue foregone due to incentives—amounted to approximately 2.5% of GDP, underscoring the fiscal impact of these policies. The government is reviewing the incentive regime to ensure alignment with the Uganda Vision 2040 and the National Development Plan III, prioritizing incentives that yield demonstrable socio-economic benefits.
Looking ahead, the government is expected to rationalize incentives, phasing out redundant or ineffective exemptions, and strengthening oversight to boost domestic revenue mobilization. Stakeholders should closely monitor legislative amendments and URA guidance to ensure ongoing compliance and maximize available benefits.
- Uganda Revenue Authority
- Ministry of Finance, Planning and Economic Development
- Parliament of the Republic of Uganda
Key Statistics: Revenue, Collection, and Enforcement Trends
Uganda’s tax landscape in 2025 continues to evolve as the government pursues increased revenue mobilization, improved compliance, and more robust enforcement. Key statistics offer insight into the performance and challenges facing the Uganda Revenue Authority (URA), as well as the national outlook for taxation trends.
- Revenue Collection: For the fiscal year 2023/24, the Uganda Revenue Authority (URA) reported net revenue collections of UGX 25.2 trillion, reflecting a 16.4% growth compared to the previous year. This performance achieved 100.6% of the URA’s annual target, indicating improved efficiency and compliance.
- Tax-to-GDP Ratio: Uganda’s tax-to-GDP ratio stood at approximately 14% in 2023/24, with government targets to increase this to 18% by 2027. This is in line with the Ministry of Finance, Planning and Economic Development’s medium-term revenue strategy, aiming for more sustainable domestic financing.
- Enforcement and Compliance: The URA continues to enhance enforcement, leveraging digital tools such as the Electronic Fiscal Receipting and Invoicing Solution (EFRIS), and the Digital Tax Stamps system. In 2024, tax compliance improved, with registered taxpayers increasing by 16% year-on-year, and EFRIS adoption reaching over 46,000 businesses (Uganda Revenue Authority).
- Key Tax Types: The largest contributors to tax revenue remain Value Added Tax (VAT), Pay-As-You-Earn (PAYE), and Corporate Income Tax. For 2023/24, VAT collections grew by 21%, PAYE by 13%, and Corporate Income Tax by 17%.
- Outlook for 2025 and Beyond: The URA and Ministry of Finance project further increases in revenue collection, bolstered by new tax policy measures introduced in the Tax Amendment Acts 2024. The expansion of digital monitoring, ongoing taxpayer education, and greater scrutiny of the informal sector are expected to drive compliance and enforcement.
Looking ahead, Uganda’s focus remains on broadening the tax base, reducing evasion, and achieving targets set in its domestic revenue mobilization strategy. Continuous investment in technology, legislative reforms, and taxpayer engagement are anticipated to shape tax collection and enforcement trends through 2025 and the following years.
Projected Tax Policy Shifts for 2026–2030
Uganda’s tax policy direction for 2026–2030 is shaped by ongoing efforts to improve domestic revenue mobilization, compliance, and economic resilience. As the country advances towards its Vision 2040 and National Development Plan III (NDP III), the government is prioritizing tax reforms to fund infrastructure, social services, and post-pandemic recovery. Several key legislative, administrative, and strategic shifts are projected for the next five years.
- Broadening the Tax Base: The Ugandan government has consistently emphasized the need to increase the tax-to-GDP ratio, which stood at approximately 13.5% in FY2022/23—below the sub-Saharan Africa average. In the 2026–2030 period, new initiatives are expected to target the informal sector, real estate, and digital economy, with the Uganda Revenue Authority (URA) planning enhanced data analytics and registration drives to capture more taxpayers (Uganda Revenue Authority).
- Tax Administration Reforms: Digitalization will play a central role in improving compliance and transparency. The URA is set to expand its Electronic Fiscal Receipting and Invoicing System (EFRIS) and e-tax platforms, aiming to reduce tax evasion and increase voluntary compliance. These reforms are expected to modernize processes and align Uganda with best practices (Uganda Revenue Authority).
- VAT and Excise Duty Adjustments: Policy makers are reviewing the Value Added Tax (VAT) regime, currently at 18%, with discussions on possible rate adjustments and the rationalization of exemptions to broaden the revenue base. Excise duties on digital services, tobacco, and alcoholic beverages are also likely to be revised to match evolving consumption patterns and health objectives (Ministry of Finance, Planning and Economic Development).
- International Taxation and BEPS: Uganda is aligning with international tax standards, including the Base Erosion and Profit Shifting (BEPS) framework. New transfer pricing regulations and stricter enforcement are anticipated, particularly targeting multinationals and cross-border digital transactions (Ministry of Finance, Planning and Economic Development).
- Green and Environmental Taxes: Environmental sustainability is emerging as a priority, with the expectation that green taxes—such as carbon taxes or levies on plastic use—will be introduced or expanded to support climate change mitigation and adaptation goals (National Environment Management Authority).
Looking ahead, Uganda’s projected tax policy shifts for 2026–2030 are geared toward boosting revenue collection, improving fairness, and supporting sustainable development. The government’s commitment to legislative and administrative reforms, coupled with international cooperation, signals a transformative period for the country’s tax landscape.
Resources, Guidance, and Official Contacts
Uganda provides a range of official resources, guidance materials, and contact points to assist individuals and businesses with tax obligations, compliance, and policy updates in 2025. The Uganda Revenue Authority (URA) remains the primary institution for tax administration, collection, and taxpayer education. The URA’s official website features comprehensive information on registration, filing procedures, e-services, and downloadable tax guides. Taxpayers can access portals to register for Taxpayer Identification Numbers (TINs), file returns, pay taxes electronically, and check compliance status.
- Guidance and Resources: The URA publishes up-to-date tax guides covering Value Added Tax (VAT), income tax, withholding tax, and customs duties. Resources include sector-specific guidance, FAQs, and step-by-step tutorials on using online services. The Tax Education portal offers video tutorials, webinars, and downloadable brochures for taxpayers.
- Legislation and Policy: The official texts of tax laws and statutory instruments are available through the Parliament of Uganda and the Ministry of Finance, Planning and Economic Development. These sites provide access to the Income Tax Act, VAT Act, and annual Finance Bills, alongside amendments and explanatory memoranda.
- Compliance and Rulings: The URA issues public notices, taxpayer alerts, and binding rulings on specific tax matters. The URA Public Notices page is regularly updated with deadlines, policy changes, and compliance reminders. The Judiciary of Uganda website contains decisions from the Tax Appeals Tribunal, which are critical for understanding legal interpretations and dispute resolution.
- Contact Points: Taxpayers can reach the URA through the official contact center, which supports inquiries via telephone, email, or in-person appointments at regional offices. The URA also operates a WhatsApp helpline and social media channels for real-time assistance.
- Professional Support: The Institute of Certified Public Accountants of Uganda (ICPAU) maintains a directory of licensed tax consultants and offers continuing education for practitioners, ensuring access to accredited professional advice.
These official channels are expected to expand digital and in-person support in 2025 to meet the growing demands of taxpayers and to facilitate higher compliance rates in line with national revenue targets.
