Matia Kasaija, the Minister of FinanceUganda’s budget for Financial Year 2025/26 amounts to Shs72.37 trillion. According to Matia Kasaija, the Minister of Finance, domestic revenue will amount to Shs 37.55 trillion, of which Shs 33.94 trillion will be tax revenue, Shs 3.28 trillion non-tax revenue, and Shs 328.6 billion Local Government revenue.According to Kasaija, an additional revenue of Shs 538.6 billion will be raised from new tax policy measures that were approved by Parliament. In addition to raising revenue, the measures will support the growth of businesses and the economy.The measures also include technical amendments to tax laws aimed at improving clarity and consistency, creating a fairer and more predictable tax environment for businesses and taxpayers, and removing ambiguities that create loopholes leading to revenue leakages.“These amendments are also intended to enhance tax administration, encourage voluntary compliance, and empower the Uganda Revenue Authority (URA) to effectively enforce tax laws,” Kasaija said while delivering the budget speech for FY 2025/2026 at Kololo Independence Grounds on Thursday 12th June 2025.The TaxesKasaija says Government has increased the taxes on cigarettes to discourage consumption but also generate additional revenue.Excise duty on soft cap cigarettes has been increased to Shs 65,000 per 1,000 sticks from Shs 55,000, and hinge lid cigarettes to Shs 90,000 per 1,000 sticks from Shs 80,000.For those outside EAC, excise duty on soft cap cigarettes has been increased to Shs 150,000 per 1,000 sticks from Shs 75,000, and hinge lid cigarettes to Shs 200,000 per 1,000 sticks from Shs 100,000.Kasaija added that Government has removed the excise duty rate of 30 percent or Shs 950 per litre, whichever is higher, on beer manufactured from barley that is grown and malted in Uganda, because it was redundant. “Government has adjusted the excise duty on beer manufactured with local raw material content of at least 75 percent by weight of its constituents, excluding water, to 30 percent or Shs 900 per litre from 30 percent or Shs 650 per litre, whichever is higher. This is to ensure that a manufacture pays the same amount of tax whether using a specific rate or an ad valorem rate,” Kasaija said.Taxes on External TradeGovernment has imposed a small fee of 1 percent of the customs value on taxable items under the common external tariff.This measure seeks to align Uganda’s tax policy with those of other EAC Partner States, where similar fees have been imposed.For instance, Kasaija said, Kenya applies a 2 percent CIF charge.Government has also imposed an export levy of USD 10 per metric ton of wheat bran, cotton cake or maize bran to encourage local value addition, particularly in the production of animal feeds. Currently, these products are exported as raw materials in the region, where value is added and imported into Uganda as finished goods. Therefore, this measure will encourage value addition and create jobs for Ugandans.Taxes on TextilesGovernment has reduced the import duty on imported fabrics. Effective 1st July 2025, the duty will be USD 2 per kilogram or 35 percent, whichever is the higher, down from USD 3 per kilogram or 35 percent, whichever is higher.In addition, the import duty on garments has been reduced to USD 2.5 per kilogram or 35 percent, whichever is higher, from USD 3.5 per kilogram or 35 percent, whichever is higher.Income TaxGovernment has granted a three-year income tax holiday for startup businesses established by citizens after 1st July 2025.This is intended to support start-ups that struggle with high initial investment costs.The incentive is to foster innovation, encourage formalisation of SMEs, enhance business survival, and promote employment.Government has also granted an exemption from capital gains tax on transactions where an individual transfers asset to a company they have established but also under their control.“This is a deliberate policy intervention aimed at encouraging formalisation of businesses,” Kasaija said, adding that currently, many Ugandans operate businesses under their personal names, often as sole proprietors or informal entities.“When these individuals seek to transition into more formal and structured corporate entities for purposes of growth, access to finance, strengthening governance, or succession planning, they face a capital gains tax liability simply for transferring their assets into a company they fully own. This tax burden has been removed,” the Minister said.Income Tax Exemption for Bujagali Hydro-Power ProjectGovernment has granted an income tax exemption to Bujagali Energy Limited for one year up to 30th June 2026 in accordance with contractual obligations. This is intended to mitigate a rise in electricity tariffs.Removal of Stamp Duty on Mortgages and AgreementsGovernment has also removed stamp duty on mortgages and agreements. This reform is intended to lower the cost of debt for businesses and individuals. It will also remove the financial burden imposed on businesses and individuals when they enter into agreements.Tax Procedures CodeGovernment has extended the waiver period of any interest and penalties outstanding as at 30th June 2024, provided that the taxpayer pays the principal tax by 30th June 2026. This waiver is intended to provide relief to businesses and individuals to enable them to settle outstanding tax liabilities and resume normal operations.Value Added TaxGovernment has implemented the Electronic Fiscal Receipting and Invoicing System (EFRIS) to improve tax compliance and reduce tax evasion.However, concerns have been raised regarding the high penalties of Shs 6 million per invoice, regardless of the value of the transaction, which disproportionately burdened taxpayers.“To address this issue, the penalty structure has been amended so that the penalty for non-compliance will instead be twice the tax owed by the taxpayer. I urge taxpayers to embrace the EFRIS system as it helps the taxpayer to reduce lengthy and burdensome interactions with URA staff, audits and penalties. It also promotes transparency and creates an even-playing field,” Kasaija said.The post REVEALED: New Taxes That Will Help URA Raise Shs33.9 Trillion In Revenue appeared first on Business Focus.