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The Ugandan government has rolled out a comprehensive tax relief package aimed at supporting start-up businesses and strengthening local entrepreneurship. These measures, introduced through amendments to various tax laws in 2024, are designed to reduce the financial burden on new and small enterprises, encourage formalization, and stimulate innovation across key economic sectors.
At the heart of the initiative is a new tax amnesty program that offers waivers on penalties and interest for businesses with outstanding tax arrears. Under the Tax Procedures Code (Amendment) Act, 2024, any taxpayer who pays their principal tax liabilities (as of June 30, 2023) before December 31, 2024, will benefit from a full waiver of accrued interest and penalties. This policy, first used during the COVID-19 period, has now been revamped to specifically target emerging entrepreneurs and informal businesses looking to formalize.
Additionally, the government has approved targeted tax waivers totaling UGX 9.5 billion (approx. USD 2.6 million) for selected entities including private companies, infrastructure development groups, and educational institutions. These exemptions, granted under Section 40(1) of the Tax Procedures Code Act, are part of a broader strategy to stimulate private sector growth and remove fiscal obstacles for job-creating enterprises.
Incentives have also been expanded in key strategic sectors such as electric vehicle manufacturing, agriculture, specialized healthcare, and information technology. Start-ups operating in these industries can now access a range of benefits, including VAT exemptions, corporate income tax holidays, capital allowance deductions, and waivers on customs duties and withholding taxes. The 2024 Income Tax Amendment Act also introduced exemptions on income earned from investments made through venture capital and private equity funds, thereby increasing the flow of capital into Uganda’s start-up ecosystem.
These reforms are part of the government’s broader push to support local innovation, promote industrialization, and grow Uganda’s formal economy. The Ministry of Finance has emphasized that start-ups and informal businesses are vital for job creation and national development. By easing tax compliance and reducing the cost of doing business, the government hopes to encourage more entrepreneurs to register their businesses, access funding, and contribute to the tax base over time.
Uganda Revenue Authority (URA) has encouraged businesses to take advantage of the tax amnesty program by checking their arrears on the URA portal and settling the principal tax owed before the end-of-year deadline. Businesses that qualify must apply formally to the URA to receive their waivers, and sector-specific incentives may require additional documentation or certification depending on the type of business activity.
Despite the positive reception, some Members of Parliament have raised concerns over the transparency of the waiver allocation process, urging that more be done to ensure small businesses benefit alongside larger institutions. Historically, Uganda has lost significant revenue through tax waivers estimated at over UGX 2.9 trillion annually, so striking a balance between relief and fiscal sustainability remains a key challenge.
In conclusion, Uganda’s 2024 tax reforms represent a significant opportunity for start-ups to reduce their tax burdens, attract investment, and scale their operations. Entrepreneurs are advised to act promptly to meet eligibility requirements and position themselves to benefit from these groundbreaking relief measures. The success of this initiative will depend on continued public awareness, efficient implementation by the URA, and transparent governance to ensure fair access across the entrepreneurial ecosystem.
