Uganda Proposes 3-Year Tax Break for Local Startups

The Ugandan government has introduced the Income Tax Amendment Bill, 2025, which proposes a three-year income tax exemption for startup businesses established by Ugandan citizens.

The bill presented to Parliament by Finance Minister Matia Kasaija states that its aim is “to provide for the exemption of startup businesses established by a citizen for three years from tax.” A legislative move in response to the alarming number of business closures in the country.

“This is a welcome step that will give startups breathing space to stabilize before facing tax obligations,” said Sarah Atom, a business consultant based in Kampala. “But it must be accompanied by practical support like access to affordable financing and simplified compliance.”

Data from the Uganda Registration Services Bureau (URSB) reveals that approximately 10,000 businesses are deregistered annually. These closures are largely attributed to tax burdens, lack of affordable credit, and unstable market conditions.

Despite Uganda having one of the highest rates of early-stage entrepreneurship globally, more than 70% of new ventures shut down within their first two years. Should the bill be passed, the proposed tax relief would ease financial strain for new entrepreneurs, particularly those operating in sectors like agribusiness, technology, and services.