Parliament has passed a series of new tax laws targeting imported second-hand clothing and construction materials to fund the upcoming financial year.
Lawmakers approved the External Trade (Amendment) Bill, 2026, on Tuesday, introducing a 30 percent environmental levy on used clothes, locally known as mivumba. State Minister for Finance (General Duties) Henry Musasizi told the House the tax aims to protect the domestic textile industry while increasing national revenue.
Finance Committee Chairperson Amos Kankunda noted the move aligns with East African Community goals to phase out used imports and promotes the "Buy Uganda, Build Uganda" (BUBU) policy. However, the levy faced pushback from some legislators who argued the cost would fall on the poor.
"The tax hike is a 'punitive' measure that disproportionately affects low-income Ugandans who rely on the affordable second-hand market for their basic dignity," stated Hon. Brenda Nabukenya.
In a move to support small businesses, Parliament also passed the Value Added Tax (Amendment) Bill, 2026. This law doubles the VAT registration threshold from Shs150 million to Shs300 million. Kankunda explained that the previous limit, unchanged since 2015, forced too many small enterprises to hire expensive accountants for monthly filings.
"In practice, most businesses in this range contribute about 3 percent of total VAT collected," Kankunda told the House.
Legislators also revised the Excise Duty (Amendment) Bill, 2026, raising taxes on essential building materials. The duty on cement, adhesives, and grout increased from Shs500 to Shs750 per 50kg bag. Government defended the hike by noting that rates had remained stagnant for over a decade.
Additional tax measures approved include:
- Cooking Oil: A new tax of Shs400 per litre.
- Motorcycles: First-time registration fees rose from Shs200,000 to Shs500,000.
- Sugar: Excise duty on cane sugar doubled from Shs100 to Shs200.
- Plastics: A new levy of US$1,500 per tonne to address environmental pollution.
The House further approved a sweeping tax amnesty through the Tax Procedures Code (Amendment) Bill, 2026. This provision waives all tax arrears, penalties, and interest owed by taxpayers as of June 30, 2016. The policy intends to clean up the Uganda Revenue Authority (URA) ledger and provide businesses with a fresh start.
