Uganda’s economy is poised for accelerated growth, supported by a strategic budget and significant tax reforms aimed at achieving “Full Monetisation of Uganda’s Economy.” This was the central message delivered at the Ernst & Young Budget Breakfast Forum at the Sheraton Kampala, which convened government officials, business leaders, development partners, and the media to unpack Uganda’s FY 2025/26 Budget.
Underpinned by strong economic indicators, the budget, whose theme emphasizes monetizing Uganda’s economy through commercial agriculture, industrialization, services expansion, digital transformation, and market access, was presented alongside macroeconomic projections, revenue mobilization strategies, and a comprehensive tax reform package designed to catalyze growth and private‑sector investment.
In a presentation by Robert Mbaziira, Senior Tax Manager at Ernst and Young, Uganda’s economy is forecast to expand by 6.3% in FY 2024/25, up from 6.1% in the prior year, with growth expected to accelerate to at least 7.0% in FY 2025/26 and reach double digits once oil and gas production commences. The fiscal deficit is projected at 7.6% of GDP in FY 2024/25, an improvement from 5.5% in FY 2023/24, reflecting efforts to contain recurrent spending and boost revenue collection.
Inflationary pressures have eased considerably, with headline inflation declining from a peak of 4.1% in May 2024 to 3.4% in May 2025, buoyed by strong export performance and increased foreign direct investment. Concurrently, commercial bank lending rates softened marginally from 18.1% in November 2024 to 17.7% in March 2025, while the Central Bank Rate was lowered to 9.75% in June 2025 (from 10.25% in April 2024), aiming to spur credit to the private sector.
The total budget stands at UGX 72.3 trillion, with domestic revenues expected to finance approximately 78.5% of expenditures. Key programme areas earmarked for significant allocations include infrastructure development (notably roads, energy, and water), human capital (health and education), expansion of the services sector, and strengthening governance and security institutions.
While specific sectoral allocations weren’t detailed in the presentation, the focus remains on the core monetization themes.
Mbaziira also highlighted the comprehensive tax reform package. In May, the Parliament passed six Tax Amendment Acts, which are set to take effect from July 1st, 2025, upon presidential assent. These include the Income Tax (Amendment) Act, Value Added Tax (Amendment) Act, Tax Procedures Code (Amendment) Act, Stamp Duty (Amendment) Act, Excise Duty (Amendment) Act, and other Miscellaneous Amendments representing significant changes for businesses and investors.
- Income Tax (Amendment) Act, 2025
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- Extension of Exemption for the Bujagali Hydropower Plant until 30 June 2026, with retrospective effect from 1 July 2024.
- Three‑year exemption for startups: New businesses by Ugandan citizens not exceeding UGX 500 million investment capital will enjoy a three‑year tax holiday, provided they file the prescribed returns and have not benefited previously.
- Clarification of agricultural inputs exemption, expansion of roll‑over relief definitions, exemption of digital services by non‑residents to their Ugandan associates, and inclusion of the International Atomic Energy Agency on the list of tax‑exempt organisations.
- Tax Procedures Code (Amendment) Act, 2025
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- Individuals will use their National Identification Number (NIN) as their TIN, non‑individuals use URSB registration numbers, and foreign entities may use foreign tax authority TINs.
- Waiver of interest and penalties outstanding as of June 30th, 2024, for taxpayers who settle principal tax by June 30th, 2026 (on a pro‑rata basis for partial payments).
- Harsher penal tax for non‑compliance with electronic fiscal devices and e‑invoices, and introduction of a centralized gaming and betting payments gateway (licensed by BoU) with double‑tax penalties for non‑use.
- Value Added Tax (Amendment) Act, 2025
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- Introduction of an anti‑fragmentation rule empowering the URA Commissioner to aggregate separate consignments for VAT liability assessment.
- Inclusion of the UN and specialized agencies (with IAEA replacing IAA) on the list of VAT‑exempt institutions.
- Adjustments to the VAT status of certain supplies, reclassifying some from standard rated to exempt, exempt to standard, and standard to zero rated, to align with policy objectives.
- Excise Duty (Amendment) Act, 2025
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- Allows refunds or offsets of excise duty paid on damaged, expired, or obsolete goods, subject to documented proof and application to the Commissioner.
- Further amendments introduce seven bespoke penalties and compliance measures targeting various sectors.
- Stamp Duty & Other Miscellaneous Amendments
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- While details of Stamp Duty amendments were briefly outlined, additional levies include a 1.5% Infrastructure Levy on imported goods (with carve‑outs for EAC schedules and plant/machinery), a 1% Import Declaration Fee, and recalibrated Export Levies (e.g., wheat bran at USD 10/tonne). The Hides and Skins Export Duty Bill removes ministerial discretion over exemptions and sets a new USD 0.80/kg rate. All take effect from 1 July 2025.
Implications for stakeholders
This budget balances revenue mobilization with incentives to drive private investment, particularly in agriculture, manufacturing, and digital services. The startup tax holiday and streamlined TIN processes aim to formalize Uganda’s burgeoning SME sector, while the anti‑fragmentation VAT rule and centralized gaming payments system bolster compliance and curb revenue leakages. However, businesses must prepare for stricter enforcement of electronic invoicing and excise duties and engage proactively with URA to leverage exemptions and compliance waivers.
See also: EY and Youn expert highlights Uganda’s new TIN mandate and shift toward parish economic focus
Uganda’s FY2025/26 budget framework signals a government intent on stimulating economic growth through strategic investment themes and a significant overhaul of the tax landscape. The combination of projected economic acceleration, substantial domestic revenue mobilization targets, and wide-ranging tax reforms —particularly the incentives for startups, simplification measures, and stricter compliance enforcement —will significantly impact businesses and investors.
The introduction of new levies also aims to broaden the revenue base. Stakeholders are advised to carefully review the specific provisions of the amended Acts, effective July 1, 2025, to understand the full implications for their operations and planning. The success of this ambitious plan hinges on effective implementation and continued favourable economic conditions.
The EY Budget Breakfast Forum underscored the critical role of public‑private collaboration in translating these policies into tangible socio‑economic gains.
