Uganda VAT Threshold Doubles to UGX 300 Million: What It Means

What changed on 1 July 2026

On 23 September 2026, the Uganda Revenue Authority published a URA public notice confirming that the Income Tax (Amendment) Act 2026 and the Excise Duty (Amendment) Act 2026 took effect on 1 July 2026. For VAT, two changes matter most: the annual registration threshold doubled from UGX 150 million to UGX 300 million, and the 6% withholding VAT no longer applies where a valid EFRIS e-invoice or e-receipt is issued. Taxpayers must review and adjust returns for July 2026 onward. The affected returns are PAYE, Excise Duty, Withholding Tax, VAT, and Gaming Tax.

The new VAT registration threshold: who registers, who doesn't

The threshold change is aimed at reducing compliance costs for SMEs and improving cash flow. In plain terms: if your annual taxable turnover is below UGX 300 million, you may no longer be required to register for VAT. That is a meaningful shift for businesses that crossed the old UGX 150 million mark but stayed well under 300 million. The exact registration and cancellation conditions still sit with URA, so treat this as a decision to evaluate, not an automatic status change.

Deregistration: a window for some businesses

If you registered for VAT solely because you passed UGX 150 million, the higher threshold may give you room to apply for deregistration. The practical question is whether deregistration benefits you: staying registered can preserve input VAT recovery if you sell to VAT-registered customers; leaving can reduce filing and compliance costs if you mainly sell to final consumers or small businesses. Work through your customer mix and your input VAT before applying. This is a classic case where independent advice prevents a reversible-by-bureaucracy mistake.

Who should think twice before deregistering

• You sell mostly to VAT-registered businesses that expect a VAT invoice
• You regularly claim input VAT on significant purchases
• You export goods or services where VAT treatment may be complex
• Your turnover is close to UGX 300 million and likely to cross it soon

The end of 6% withholding VAT on EFRIS e-invoices

The second change removes a recurring B2B cash-flow friction. Designated VAT withholding agents no longer withhold 6% of the taxable value when a valid EFRIS e-invoice or e-receipt is issued. In practice, if you issue a compliant e-invoice through EFRIS, the buyer should not withhold that 6%. This means the full taxable amount stays with you at the time of the transaction, and your VAT remittance obligation is handled through your normal return.

Designated VAT withholding agents no longer withhold 6% of the taxable value when a valid EFRIS e-invoice is provided.

For businesses that already issue EFRIS e-invoices, this is a direct cash-flow improvement. For those still outside EFRIS, the withholding obligation remains a live issue. If you also buy software or digital services, the separate software withholding tax for cross-border payments still applies to qualifying transactions.

What this means for B2B cash flow and procurement

For buyers, the removal of withholding VAT on compliant EFRIS e-invoices simplifies accounts payable: you no longer need to split the 6% and remit it separately on those transactions. For sellers, cash arrives whole rather than short. But the change also raises the stakes on getting e-invoicing right. A missing or invalid e-invoice may still trigger the old withholding treatment, so invoice discipline becomes a direct cost control. If you import goods or equipment as part of the same procurement cycle, the new import levy on Ugandan procurement is another line item to model.

Action steps for finance teams

Start by reviewing returns for July 2026 onward and confirming whether any withholding VAT was deducted after the change. Then map your taxable turnover against the new UGX 300 million threshold and decide whether to apply for deregistration or adjust your systems. If you rely on EFRIS, test that your e-invoices are being issued in a way that exempts withholding, and keep the evidence. Finally, coordinate with your tax advisor on any transitional adjustments across PAYE, Excise Duty, Withholding Tax, VAT, and Gaming Tax; the broader Tax ID shift replacing your TIN in 2026 may also affect your filing identifiers.