Startups Set to Benefit as Uganda Tables Tax Holiday in Parliament
The Ugandan government is introducing a three-year income tax holiday for new, locally owned startups in a bid to spur innovation and business formalization. Announced as part of the 2025/26 national budget by Finance Minister Matia Kasaija, the tax break will apply to Ugandan-founded businesses registered after July 1, 2025.
The incentive is a central feature of Uganda’s 72.4 trillion shillings ($19.4 billion) budget, which seeks to increase domestic revenue by 538.6 billion shillings ($144 million) while creating a more enabling environment for entrepreneurs. Minister Kasaija said the new tax measures aim not only to boost revenue but also to stimulate economic activity by reducing barriers for early-stage businesses.
Startups, particularly those run by Ugandan citizens, stand to benefit from the tax reprieve, which is designed to foster formalization in a sector heavily dominated by informal enterprises. The initiative is expected to attract youth-led ventures and small businesses seeking to grow sustainably within the formal economy.
To further ease business operations, the government scrapped capital gains tax on asset transfers into companies wholly owned by individuals and removed stamp duty on mortgages and agreements. These moves are expected to lower the cost of accessing credit and encourage more structured business operations.
A penalty waiver has also been extended to taxpayers who settle their principal tax liabilities by June 30, 2026, while fines under the Electronic Fiscal Receipting and Invoicing System (EFRIS) have been revised from a flat rate to twice the owed tax amount, promoting digital compliance.
“This waiver is intended to provide relief to businesses and individuals to enable them to settle outstanding tax liabilities and resume normal operations,” Kasaija said. The system promotes transparency and creates an even playing field.”
The budget will be financed through a mix of tax revenue, domestic borrowing, and external financing.