KAMPALA – The Kampala City Traders Association warned Tuesday that proposed tax amendments for the 2026/27 financial year could increase the cost of doing business, constrain cash flow and push more enterprises into informality if not revised.
Presenting their memorandum to the Finance Committee chaired by Deputy Chairperson Moses Aleper on April 8, 2026, KACITA Chairperson Isa Sekito said traders appreciate the government’s efforts to boost revenue, but the timing of the proposals is challenging for businesses still recovering from economic shocks.
“The business community appreciates government’s continued efforts to enhance domestic revenue mobilization. However, the proposed amendments come at a time when businesses, particularly micro, small and medium enterprises, are still recovering from multiple economic shocks,” Sekito said.
KACITA, which represents more than 3 million traders from different sectors, noted that while the tax proposals are well-intended, they could inadvertently increase the cost of doing business, constrain cash flow and reduce the competitiveness of local enterprises.
Sekito highlighted concerns with the proposed Income Tax Amendment Bill 2026, particularly new withholding taxes and the introduction of a 0.5% alternative minimum tax on businesses declaring losses for seven consecutive years.
“The 0.5% alternative minimum tax penalizes businesses that are genuinely making losses due to economic challenges,” he said, adding that “this discourages investment and business recovery.”
He said a proposed 10% withholding tax on telecom agents would hit low-margin operators.
“The 10% withholding tax on commissions directly reduces earnings of agents and distributors, many of whom operate on thin margins,” Sekito said.
On the Value Added Tax Amendment Bill 2026, KACITA argued that the proposed increase in the VAT registration threshold from 150 million shillings to 250 million shillings is insufficient.
“The 18% rate increases the final price of goods and services, reduces affordability and domestic consumption, and makes Ugandan businesses less competitive compared to regional peers,” he said.
He warned that high VAT discourages compliance, with many businesses opting to remain informal. KACITA proposed raising the threshold further to at least 1 billion shillings and reducing VAT from 18% to 16% to align with regional markets.
Turning to the Stamp Duty Amendment Bill 2026, Sekito cautioned against doubling stamp duty on land transactions from 1.5% to 3%.
“Doubling stamp duty on land transfers significantly raises the cost of acquiring business premises and discourages investment,” he said.
He also opposed new stamp duties on vehicle registration and transfers, noting these would raise transport and logistics costs that are ultimately passed on to consumers.
KACITA expressed strong reservations about the Excise Duty Amendment Bill 2026, warning that increased taxes on fuel, sugar, cooking oil and cement would drive inflation.
“Higher fuel prices will raise transportation and distribution costs and affect supply chains across all sectors. Businesses will pass these costs to consumers,” Sekito said.
KACITA also opposed proposals in the External Trade Amendment Bill 2026 to increase surcharge on used clothing from 15% to 30%.
“This represents a 100% increase in surcharge burden, which is highly unsustainable for traders,” Sekito said, warning of job losses and reduced compliance.
He noted that the sector currently contributes about 280 billion shillings annually and supports thousands of livelihoods.
Separately, the Uganda Manufacturers Association called for amending the Tax Appeals Tribunal Act to review the requirement for taxpayers to pay 30% of assessed tax before filing an appeal.
UMA officials led by Chairperson Richard Sekalala said the provision is stifling business operations and denying taxpayers access to justice.
UMA member John Jet Tusabe said the requirement applies across the board regardless of the nature of the dispute or the taxpayer’s financial capabilities.
“The charge is regardless of whether the appeal is an issue of interpretation, or whether the assessment has clear errors that have to be corrected, or regardless of whether the taxpayer has capacity today for the 30%,” he said.
On broader tax reforms under the committee’s scrutiny, UMA proposed amendments to the Income Tax Amendment Bill 2026, urging the government to either eliminate or reduce the proposed 40% income tax rate to 35%, arguing that it undermines Uganda’s competitiveness and investment climate.
“Workers are already overtaxed. Attraction and retention of talent in Uganda is increasingly becoming difficult partly due to the unfavorable PAYE tax rates,” Tusabe said.
The manufacturers proposed increasing the pay-as-you-earn threshold from 235,000 shillings to 500,000 shillings per month, citing the rising cost of living and warning that excessive taxation could undermine compliance and affect revenue collection.
The manufacturers also objected to new and revised excise duties on selected products, including a 3% tax per liter or kilogram of locally produced paints and 10% on imported paints, as well as the increase in tax on cement from 500 shillings to 1,000 shillings per 50 kilograms.
However, UMA welcomed the proposal to extend the tax holiday for the Bujagali Hydro Power Project to seven years, pledging to submit further evidence to the committee to justify the continued tax exemption.
Bungokho Central Representative Richard Wanda cited a case where the Uganda Revenue Authority assessed a taxpayer at 33 billion shillings, but the tribunal later determined the actual liability at 8 billion shillings. He said requiring such a taxpayer to first pay 30% of the initial assessment risks crippling businesses.
