The main business taxes in Uganda are income tax on profits (30% for companies), Value Added Tax (VAT) at 18% once turnover passes the registration threshold, Pay As You Earn (PAYE) deducted from employees' pay, withholding tax on certain payments, and stamp duty on certain documents and transactions. Depending on the business, excise duty, customs duty, local service tax and property rates may also apply. Most are administered by the Uganda Revenue Authority (URA).
Which business taxes in Uganda apply to you depends on your structure, turnover, activities and whether you employ staff. This guide gives an overview of each tax, the filing rhythm, and the steps to stay compliant.
An overview of business taxes in Uganda
The table below summarises the taxes most businesses meet. Rates are those published for the 2025/26 year by URA and major advisers, with the changes made by the 2026 tax amendments noted. Rates and thresholds change with each budget, so confirm current figures with URA or with us.
| Tax | Who pays | Key points |
|---|---|---|
| Corporate income tax | Companies, including branches of foreign companies | 30% of chargeable income. Branches also pay tax on repatriated profits. |
| Individual income tax | Sole traders and partners | Charged on business profits at graduated rates. |
| Presumptive tax | Small businesses below the turnover limit | A simplified tax based on turnover instead of profits. |
| VAT | Businesses making taxable supplies above the threshold | Standard rate 18%; exports are zero-rated. The annual registration threshold rose from UGX 150 million to UGX 300 million from 1 July 2026. |
| PAYE | Employers, on behalf of employees | Deducted from salaries at graduated rates and paid to URA monthly. |
| Withholding tax | Designated withholding agents and payers to non-residents | For example 6% on certain payments to residents and 15% on many payments to non-residents. |
| Stamp duty | Parties to chargeable instruments | For example 0.5% on registering share capital and 1.5% on transfers of shares and property. |
| Excise duty | Producers, importers and certain service providers | Applies to goods such as alcohol, fuel and soft drinks and to services such as airtime, data and some financial services. |
| Local service tax | Employees and self-employed persons, collected for local governments | An annual amount between UGX 5,000 and UGX 100,000, depending on income. |
Income tax
Income tax is charged under the Income Tax Act, Cap. 338. Companies pay corporate income tax at 30% of chargeable income, which is business income less allowable deductions and capital allowances. Sole proprietors and partners pay individual income tax on their share of profits. Companies generally pay provisional tax in instalments during the year and file a final return within six months after the end of the year of income. Losses can be carried forward, subject to limits in the Act.
Smaller businesses below the turnover limit in the Income Tax Act may be taxed on a presumptive basis, which uses turnover rather than profits. This can simplify compliance, but it is not suitable for every business, and certain professionals and activities are excluded.
Value Added Tax (VAT)
VAT is charged at 18% on taxable supplies of goods and services, with some supplies zero-rated or exempt. A business must register when its taxable turnover exceeds, or is expected to exceed, the threshold. The 2026 budget raised the annual threshold from UGX 150 million to UGX 300 million with effect from 1 July 2026. Registered businesses charge VAT on sales, claim credit for VAT on qualifying purchases and file monthly returns, generally by the 15th day of the following month. URA also requires e-invoicing or e-receipting for many VAT-registered taxpayers.
PAYE and payroll obligations
Every employer must deduct PAYE from employees' taxable pay and remit it to URA by the 15th day of the following month. The individual tax bands were revised for 2026/27, so update your payroll settings. Employers must also deduct local service tax where it applies and pay National Social Security Fund (NSSF) contributions of 15% of gross pay (5% from the employee and 10% from the employer). NSSF is a social security contribution rather than a tax, but late payment carries penalties too.
Withholding tax
Withholding tax is collected at source. Government bodies and businesses designated by URA as withholding agents deduct tax, commonly 6%, from certain payments for goods and services to resident suppliers. Payments to non-residents, such as management fees, royalties and dividends, usually attract withholding tax at 15%, subject to any applicable double taxation agreement. Dividends paid by a resident company are generally subject to withholding tax, with exceptions for some company shareholders. The amounts withheld are paid to URA monthly.
Stamp duty
Stamp duty under the Stamp Duty Act applies to listed instruments, including the registration of share capital, transfers of shares and land, leases and certain agreements. Instruments that should be stamped but are not may not be accepted as evidence until the duty and any penalty are paid, so stamp key documents promptly.
Other taxes and levies
- Excise duty on specified goods and services.
- Customs duties on imports under the East African Community Common External Tariff.
- Property rates charged by local governments on certain property.
- Sector levies and fees set by regulators in areas such as mining, telecommunications and gaming.
Step-by-step: getting tax compliant
- Register the business with the Uganda Registration Services Bureau. See how to register a company in Uganda.
- Obtain a TIN from URA through its online portal.
- Register for each tax that applies, such as income tax, PAYE and VAT where you reach or expect to reach the threshold.
- Set up records and systems. Keep proper books, invoices and payroll records. URA expects records to be kept for at least five years.
- Diarise the deadlines. Monthly returns for PAYE, withholding tax and VAT; provisional and final income tax returns.
- Review annually. Check budget changes each July and update rates, thresholds and systems.
Penalties and disputes
Late filing and late payment attract penalties and interest under the Tax Procedures Code Act. If you receive an assessment you disagree with, you have the right to object to URA within strict time limits and, if you remain dissatisfied, to take the matter to the Tax Appeals Tribunal. Act quickly, because the deadlines are short.
How Mercio Advocates can help
Taxation is one of the services offered by our business law practice. We help businesses understand which taxes apply to them, structure transactions with tax in mind, review contracts for tax clauses, and respond to URA queries and assessments. Call +256 785 390 207, email info@mercio.org or book a consultation to discuss your obligations.
This article provides general information about tax law in Uganda and is not legal or tax advice. Rates, thresholds and deadlines change with each budget and should be confirmed with URA or our office. For advice on your situation, please contact Mercio Advocates.
