KAMPALA, April 15 – Uganda’s private sector has raised concern over a wide package of proposed tax amendments for the 2026/27 financial year, warning that the measures could raise operating costs, tighten liquidity and accelerate a shift of firms into the informal economy if adopted in their current form.
The Kampala City Traders Association (KACITA) told parliament’s Finance Committee on Tuesday that while it supports efforts to strengthen domestic revenue mobilisation, the timing and scope of the proposals risk adding pressure to businesses still recovering from recent economic disruptions.
KACITA, which says it represents more than three million traders across multiple sectors, flagged a series of provisions in the Income Tax (Amendment) Bill 2026 as particularly burdensome. These include a proposed 0.5 per cent alternative minimum tax on firms reporting losses for seven consecutive years and new withholding taxes targeting telecom agents and distributors.
Isa Sekito, the association’s chairperson, said the measures could distort recovery for struggling firms. He argued that taxing loss-making companies through the proposed minimum levy would “discourage investment and business recovery,” while also reducing already thin margins in low-income distribution networks.
The traders’ body also called for a revision of the proposed value-added tax threshold increase from 150 million Ugandan shillings to 250 million Ugandan shillings, saying it should be lifted further to about one billion shillings. It also proposed a reduction in the VAT rate from 18 per cent to 16 per cent, arguing that the current structure weighs on consumption and weakens competitiveness.
Concerns were also raised over the Stamp Duty (Amendment) Bill 2026, which proposes doubling stamp duty on land transactions from 1.5 per cent to three per cent, alongside new charges on vehicle registration and transfers. KACITA warned that such changes would lift transport and logistics costs across supply chains and ultimately be passed on to consumers.
Under the Excise Duty (Amendment) Bill 2026, the association cautioned that higher levies on fuel, sugar, cooking oil and cement could intensify inflationary pressures. Sekito said increased fuel costs would ripple through distribution systems, raising prices across multiple sectors.
The traders’ group also opposed a proposed increase in surcharge on used clothing imports from 15 per cent to 30 per cent, describing it as a sharp rise that could strain livelihoods within the segment. The sector, it noted, contributes about 280 billion shillings annually and supports thousands of jobs.
In a parallel submission, the Uganda Manufacturers Association (UMA) also urged revisions to several tax proposals, including a reduction in the top income tax rate from 40 per cent to 35 per cent. The group argued that the current trajectory risks weakening Uganda’s investment competitiveness and complicating efforts to attract and retain skilled labour.
UMA also called for an increase in the monthly Pay As You Earn threshold from 235,000 shillings to 500,000 shillings, citing rising living costs. It further opposed new excise duties on products such as cement and paints, warning of added pressure on production costs.
Separately, manufacturers challenged the requirement under the Tax Appeals Tribunal Act that taxpayers must pay 30 per cent of assessed tax before lodging an appeal, saying it restricts access to justice and can strain already cash-constrained firms.
Bungokho Central lawmaker Richard Wanda cited a case in which a taxpayer initially assessed at 33 billion shillings was later found liable for 8 billion shillings, arguing that the pre-payment rule could be punitive in disputed assessments.
UMA, however, welcomed a proposal to extend the tax holiday for the Bujagali Hydro Power Project to seven years, signalling conditional support for select incentives within the wider reform package.
