The government has announced new tax measures on cigarettes, beer, imports, and agricultural by-product exports in the 2025/26 national budget, in a bid to boost domestic revenue and harmonize with regional tax frameworks.
Presenting the budget to Parliament on Thursday, Finance Minister Matia Kasaija revealed significant increases in excise duties on tobacco products.
Taxes on soft cap cigarettes rose from Shs55,000 to Shs65,000 per 1,000 sticks, and hinge lid cigarettes from Shs80,000 to Shs90,000.
For imports from outside the East African Community (EAC), the rates have doubled—soft caps now taxed at Shs150,000 and hinge lids at Shs200,000 per 1,000 sticks.
Beer brewed with at least 75% local raw materials will now attract a 30% tax or Shs900 per litre, up from Shs650.
However, beer made from Ugandan barley and malt will be exempt from excise duty.
Kasaija also announced reforms to the Electronic Fiscal Receipting and Invoicing System (EFRIS). The previous Shs 6 million flat penalty for non-compliance will be replaced by a penalty twice the tax amount due, to encourage fairer enforcement.
Importers will now pay a 1% Import Declaration Fee on all taxable goods under the Common External Tariff, aligning Uganda with EAC partners like Kenya, which charges 2%.
An export levy of USD 10 per metric ton has been introduced on raw agricultural by-products like wheat bran, cotton cake, and maize bran to promote local value addition.
In a reprieve for textile traders, import duties on fabrics and garments have been reduced. Fabrics will now be taxed at USD 2/kg or 35% (down from USD 3), while garments drop from USD 3.5 to USD 2.5/kg or 35%.
On fiscal sustainability, Uganda’s public debt is projected to hit USD 31.5 billion (Shs 116 trillion) by June 2025—equivalent to 51.26% of GDP.
Of this, external debt stands at $15.49 billion and domestic at $16 billion. Despite the increase, Kasaija said the debt remains sustainable, with most of it invested in transport, electricity, and water infrastructure.
The government is also ramping up domestic revenue efforts, concessional borrowing, and debt management through initiatives like the Okusevinga programme to ensure long-term fiscal health.