A Legal Research Paper

With Reference to: The Development of Small Claims Procedure in Uganda by The Hon. Mr Justice Geoffrey Kiryabwire, Justice, Court of Appeal of Uganda and Chairman, Uganda Small Claims Implementation Committee, and the Judicature (Small Claims Procedure) Rules, SI No. 25 of 2011

1. Introduction

Access to justice is widely recognized as a cornerstone of the rule of law and economic development. Yet in many developing jurisdictions, the formal court system remains out of reach for ordinary citizens and small business operators not because courts do not exist, but because the cost, complexity, and delay of litigation make it impractical. Uganda was no exception to this reality.

By the mid-1990s, Uganda’s civil justice system was congested, non specialized, and slow. Commercial and civil disputes from large corporate claims to small debts between traders competed for the same court resources, with the same cumbersome procedures. While the establishment of the Commercial Court Division of the High Court in 1996 addressed the needs of large businesses, the SME sector and informal traders who constitute the bulk of Uganda’s business community remained without effective judicial recourse.

It was in this context that Justice Geoffrey Kiryabwire, together with a select group of legal professionals, identified the urgent need for a small claims mechanism. The result was the Judicature (Small Claims Procedure) Rules, 2011 (SI 25 of 2011), which came into force on 30^th May 2011 and were piloted in six courts from 1^st November 2012. As Justice Kiryabwire documents, the procedure quickly proved itself as a genuine “people’s court” fast, affordable, and effective.

2. Legal Framework

2.1 Constitutional and Statutory Basis

The Small Claims Procedure draws its legal authority from a hierarchy of laws. At the apex is the Constitution of the Republic of Uganda, which enshrines the right to a fair hearing and access to justice. Below the Constitution, the Judicature Act grants the Rules Committee the power, under Section 41, to make rules governing court procedure. It is pursuant to this power that the Rules Committee made the Judicature (Small Claims Procedure) Rules on 5^th May 2011.

The Rules represent a deliberate and home grown innovation. As Justice Kiryabwire notes, the SCP was “a totally home grown version of small claims court found in other parts of the world” adapted to the specific social, economic, and legal realities of Uganda, rather than simply transplanted from another jurisdiction.

2.2 The Rules: Structure and Scope

The Rules are divided into eleven parts, covering: preliminary definitions; establishment and jurisdiction; record keeping; assignment of judicial officers; parties; institution of claims; service, defence and counterclaims; default judgment; hearings; proceedings; judgment; execution; and general powers of the court. Eight Schedules set out prescribed forms for every step of the process.

Under Rule 3, a “small claim” is defined as any matter whose subject matter does not exceed Uganda Shillings Ten Million (approximately USD 2,700). The claim must be civil or commercial in nature. Rule 5 expressly excludes from the procedure: family and estate disputes; claims against the Government; suits for defamation, malicious prosecution, wrongful arrest, or seduction; divorce or nullification of marriage petitions; disputes over the validity of a will; claims for specific performance without alternative damages (with limited exceptions for tenancy and movable property); and employment contracts.

3. Key Procedural Features of the Small Claims Procedure

3.1 No Legal Representation

Perhaps the most defining feature of the SCP is the prohibition on legal representation. Rule 8(2) provides that “a party to an action shall appear in person before a court and shall not be represented by an advocate during the proceedings.” Where a body corporate is the defendant, it may appear through a representative who is not an advocate. This design choice is deliberate and central: it removes the cost barrier of hiring a lawyer and empowers ordinary Ugandans to present their own claims.

3.2 The Pre Filing Notice of Demand

Before any claim is filed, Rule 10 requires the claimant to issue a formal notice of demand to the defendant, requesting settlement within 14 days. This serves as both a practical filter many claims are resolved at this stage without court involvement and a formal record that the defendant had prior notice of the claim. Only if the defendant fails to pay within the 14-day window may the claimant proceed to file in court.

3.3 Simplified Filing and Service

Filing is initiated through a prescribed claim form (Schedule 2), to which the claimant attaches the notice of demand, proof of service, and supporting documents. A judicial officer then issues summons (Schedule 4), which the claimant or a court process server serves on the defendant. An affidavit of service must be filed within 7 days of service. Court clerks assist parties in completing forms, further reducing the procedural burden on litigants.

3.4 Inquisitorial Hearing

The hearing departs significantly from ordinary adversarial procedure. Rule 25 requires the court to hear every case “expeditiously and without undue regard to technical rules of evidence or procedure,” guided instead by fairness, impartiality, and natural justice. The judicial officer takes an active, inquisitorial role requesting each party on oath to state their case, asking questions, and guiding the inquiry. Notably, Rule 24 prohibits cross examination between parties or of witnesses, though the judicial officer may inquire into any aspect of the evidence.

3.5 Alternative Dispute Resolution

Rule 22 builds in a mandatory consideration of ADR before hearing. Within 14 days of the scheduled hearing, the judicial officer may refer parties to mediation, arbitration, or another form of ADR. Where the parties reach agreement, the judicial officer registers a consent judgment. This feature promotes amicable settlement and preserves business relationships an important consideration in Uganda’s closely knit trading communities.

3.6 Fast Track Judgment

Rule 27 requires judgment to be delivered immediately after the hearing, or within 14 days at the latest. In practice, many cases are concluded from hearing to judgment within a single sitting. As Justice Kiryabwire notes, comparative experience from South Africa and Zambia shows that small claims cases can be resolved in as little as 30 minutes to one hour. This speed is not merely a convenience; it is essential to the economic purpose of the procedure: unlocking capital that is otherwise frozen in unresolved disputes.

3.7 Flexible Execution

Where the court grants judgment for a sum of money, Rule 28 requires it to inquire into the judgment debtor’s financial position and capacity to pay. The court may then order payment in instalments or on conditions a practical accommodation that improves the prospects of actual recovery. Where the debtor still fails to comply, Rule 31 allows the creditor to apply for formal execution under Section 38 of the Civil Procedure Act.

3.8 Review, Not Appeal

A distinctive feature of the SCP is that judgments are final there is no appeal as of right. However, Rule 30 allows an aggrieved party to apply for review by the same court on limited grounds: where judgment was given in their absence (application within 6 weeks); where it was void or obtained by fraud or common mistake (within 1 year); or where there are latent errors in the judgment (within 1 year). This preserves finality while protecting parties against injustice.

4. Outcomes and Impact

4.1 Financial Recoveries

The financial results of the SCP have been striking. As documented by Justice Kiryabwire, money recovered through the procedure grew from Uganda Shillings 1.5 billion (approximately USD 417,000) in 2013 across 6 pilot courts, to Shillings 8 billion (approximately USD 2.2 million) in 2016 across 25 courts. The half year figure for 2017 already stood at Shillings 4 billion, indicating that year’s total would surpass the prior year. These are not large individual sums they are precisely the small amounts that ordinary traders and SMEs could previously not recover economically through the courts.

4.2 User Satisfaction and Reduced Court Congestion

An independent evaluation baseline study conducted by M/s Akijul Ltd in partnership with LASER and LDP of the United Kingdom in 2016 found an 80% satisfaction rate among users of the SCP. Equally significant, the introduction of the SCP led to a 55% decline in the number of claims filed using the regular civil track for equivalent monetary amounts in pilot courts. This demonstrates not only that the SCP is popular among its direct users, but that it is effectively decongesting the broader civil justice system.

4.3 Cost Benefit Returns

The independent study established that the value of claims finalised under the SCP in the 2015/16 financial year exceeded the cost of running the programme by a ratio of 11:1. Projected country wide rollout was assessed to yield a cost benefit return of 8:1. These figures make a compelling case for sustained government and development partner investment in expanding the procedure.

4.4 Broader Economic and Social Impact

Beyond the quantitative data, Justice Kiryabwire identifies several qualitative benefits of the SCP. The procedure has improved the culture of contract compliance in Uganda the knowledge that small debts can be efficiently enforced encourages parties to honour their commitments in the first place. It has improved the creditworthiness and business confidence of SME operators. And it has empowered a sector of the business community the informal trader, the market vendor, the small contractor that had effectively been excluded from the justice system.

4.5 Regional Recognition

The SCP has attracted attention well beyond Uganda’s borders. Justice Kiryabwire records that the procedure inspired the creation of a small claims procedure in the Kingdom of Lesotho and was used as a benchmarking model by the Judiciary of Rwanda. The Uganda Judiciary also received the Public Service Innovation Award in 2013 for introducing the procedure. These recognitions affirm that Uganda’s home grown innovation has lessons for the broader African context.

5. Challenges and Limitations

Notwithstanding its successes, the SCP faces a number of practical and structural challenges that must be addressed to realise its full potential.

1. Service of Process. Rule 12 places the burden of serving summons on the claimant, either personally or through a court process server. Self service is practically difficult, and relying on court process servers can be costly. Tracing defendants particularly in urban informal settings adds further difficulty.
2. Court Fees. The Rules are silent on a separate fee structure for small claims, meaning the standard civil court fees apply. For low value claims and indigent litigants, this risks making the procedure unaffordable undermining its core access to justice purpose.
3. Manipulation of Jurisdiction. There is a risk that parties or their advisors may attempt to restructure claims to fall within the SCP’s monetary limit, even where the dispute is complex or involves matters excluded under Rule 5. This could undermine the procedure’s efficiency and introduce inappropriate cases.
4. Review Provisions. The one year review window under Rule 30 carries a risk of abuse. Parties who are dissatisfied with a judgment particularly judgment debtors may use the review mechanism to delay execution and frustrate the procedure’s fast track character.
5. Execution and Compliance Culture. Obtaining a judgment is one thing; enforcing it is another. Uganda, like many developing countries, has not fully developed a culture of voluntary compliance with court orders. The application of standard Civil Procedure Rules for execution can make the enforcement of SCP judgments lengthy and expensive, eroding the procedure’s practical value.
6. Limited Rollout. Despite its success, the SCP still operates in less than half of Uganda’s magistrates’ courts. Funding constraints have slowed expansion, leaving the majority of the country’s SME operators without access to the procedure.

6. Conclusion

The Judicature (Small Claims Procedure) Rules, 2011 represent a landmark in Uganda’s legal development. Conceived as a home grown solution to a genuine access to justice crisis, the SCP has delivered on its promise providing fast, affordable, and effective dispute resolution to the SME and informal sectors that form the backbone of Uganda’s economy.

As Justice Geoffrey Kiryabwire rightly observes in The Development of Small Claims Procedure in Uganda, the procedure has become a true “people’s court.” It has improved contract compliance, boosted business confidence, reduced court congestion, and inspired neighbouring jurisdictions. The rule by rule framework of SI 25 of 2011 provides a clear, coherent, and practically workable mechanism that, when properly resourced and fully rolled out, can fundamentally transform the relationship between ordinary Ugandans and the justice system.

The future of the Small Claims Procedure is bright but only if the challenges of service, court fees, execution, and coverage are addressed with the same creativity and commitment that gave rise to the procedure in the first place. Uganda has built something worth expanding. The call is now to complete what was started.

References

1. Kiryabwire, Hon. Mr Justice Geoffrey, The Development of Small Claims Procedure in Uganda, Justice, Court of Appeals Uganda and Chairman, Uganda Small Claims Implementation Committee.
2. Judicature (Small Claims Procedure) Rules, 2011 (Statutory Instrument No. 25 of 2011), Uganda Gazette No. 36, 27 May 2011.
3. The Judicature Act, Cap. 13, Laws of Uganda.
4. The Constitution of the Republic of Uganda, 1995 (as amended).
5. M/s Akijul Ltd, LASER and LDP (UK), Independent Evaluation Baseline Study of the Small Claims Procedure in Uganda, 2016.
6. Civil Procedure Act, Cap. 71, Laws of Uganda.
7. Uganda Gazette, 20 April 2012 (Designation of Pilot Courts for Small Claims Procedure).

The new Income Tax (Amendment) Bill 2026/2027 introduces a 6% withholding tax on entertainers and extends Uganda’s tax net to foreign income. If you earn from creative work, here is exactly what the law says and what it means for your pocket.

For years, Uganda’s creative sector operated in a comfortable grey zone not because the law exempted artists from paying tax, but because the Uganda Revenue Authority (URA) simply was not looking hard enough. That is over.

The Income Tax (Amendment) Bill 2026/2027, currently before Parliament, closes that gap deliberately and systematically. It introduces new withholding obligations targeting performers directly, extends Uganda’s tax jurisdiction to income earned abroad, and rides on top of an existing legal framework the Income Tax Act that has always required creatives to pay tax. What is new is not the obligation. What is new is the enforcement.

The Foundation: Your Creative Income Has Always Been Taxable

Before examining what is new, it is important to understand what has always been true.

Under the Income Tax Act (Cap 340), all income earned by an individual resident in Uganda is subject to income tax including income from performances, licensing fees, brand deals, royalties, and any other payment received in exchange for creative work or the use of intellectual property. There is no special exemption for artists, musicians, filmmakers, or content creators.

The reason many creatives have not paid tax is not legal it is practical. URA historically lacked the tools and infrastructure to effectively monitor informal and digital income streams. That gap is closing fast. Digital platforms YouTube, TikTok, Spotify, Boomplay, and others generate traceable transaction records. URA is increasingly equipped to access and act on them.

The taxable threshold

Under the current tax bands, any individual earning more than UGX 3,820,000 annually across the financial year running July 1 to June 30 is legally required to pay income tax. For most working musicians, designers, and content creators, this figure is not a ceiling. It is a floor they cross early in the year.

The New Rule: A 6% Withholding Tax on Public Entertainers

The most operationally significant change in the Bill is the introduction of a 6% withholding tax on gross payments made to public entertainers.

How It Works

When an event organiser, promoter, brand, or corporate entity pays you to perform, they are now legally required to deduct 6% of your gross payment and remit it directly to URA before the balance reaches you.

This is not a new tax category withholding tax already exists in Ugandan law for various income types. What is new is its explicit application to entertainers and performers as a defined class of taxpayer.

What the 6% Is and Is Not

The withheld amount is a credit against your total annual tax liability, not a final settlement of it. Depending on your total income for the year, you may owe additional tax when you file your annual return. The 6% is a minimum advance payment, not a ceiling.

The Liability Trap Most Performers Will Not See Coming

Here is the provision that most creatives will not hear about until it is too late:

If your promoter, employer, or event organizer fails to withhold the 6%, the obligation to remit it does not disappear. It transfers to you.

Under the withholding tax framework, the performer remains legally responsible for ensuring the tax reaches URA. If your payer did not deduct it whether through ignorance, oversight, or deliberate avoidance URA can and will pursue you for the outstanding amount, plus interest and penalties.

Ignorance of your payer’s failure is not a legal defence. The law does not require URA to first exhaust recovery from the payer before turning to you.

Practical implication: Before any paid engagement, confirm in writing that your promoter or employer understands and will honour their withholding obligation. Do not assume. Get it in your contract.

Why This Mechanism Was Designed This Way

The withholding model is a deliberate enforcement strategy. Rather than monitoring and auditing thousands of individual artists scattered across the country, URA can now collect through a smaller, more visible set of payors venues, event companies, brands, broadcasters, and promoters who are easier to track, audit, and hold accountable. The artist becomes traceable by default, through whoever pays them.

Foreign Income: Earning Outside Uganda Does Not Mean Escaping Ugandan Tax

One of the most consequential and least discussed provisions in the Bill concerns income earned outside Uganda.

The amendment establishes that foreign sourced income earned by a Ugandan taxpayer is treated the same as income earned domestically. It is fully declarable and taxable under Ugandan law.

This affects:

• Performing artists earning fees at shows in Kenya, Tanzania, Rwanda, South Africa, or elsewhere on the continent
• Content creators receiving payments in foreign currency from YouTube AdSense, TikTok Creator Funds, Meta monetisation, or international brand partnerships
• Filmmakers and producers paid for projects produced or distributed outside Uganda
• Visual artists and designers selling work on international platforms such as Etsy, Adobe Stock, Shutterstock, or Behance

If you fall into any of these categories, that income must be included in your annual Ugandan tax return. It is not exempt because it was earned abroad, paid in dollars, or deposited into a foreign account. The determining factor is your tax residency status in Uganda not where the money came from.

Failing to declare foreign income is not a technicality. It is an ongoing legal exposure that compounds silently for every year it goes unreported.

Royalties: Classified as Property Income Under Cap 340

For creatives whose earnings come from licensing rather than performing, the applicable framework sits within the Income Tax Act’s treatment of property income.

Under Cap 340, royalties defined broadly as payments received for the use of, or the right to use, intellectual property are classified as property income and taxed accordingly. This covers:

• Licensing fees paid by radio stations, television broadcasters, or streaming platforms for use of your music
• Payments received for licensing your name, image, or likeness for commercial use
• Revenue from streaming services such as Spotify, Apple Music, Boomplay, and Audiomack
• Income from licensing trademarks, patents, or copyright in any medium

If your creative output qualifies as a capital work which original musical compositions, literary works, films, and visual art generally do under Ugandan law then income derived from licensing that work is taxable as property income. The rate and treatment differ from employment income, which is why understanding the classification matters practically.

Your Legal Obligations: A Clear Summary

There is no ambiguity about what the law now requires of creatives. Here is a direct summary:

1. Register with URA and obtain a Tax Identification Number (TIN): A TIN is the entry point to the tax system. It is free, takes minutes to obtain online at ura.go.ug, and is legally required of every person earning taxable income in Uganda.

2. Maintain records of all income: Every payment you receive from gigs, streaming withdrawals, brand deals, licensing arrangements, and international work must be documented. Records are your primary protection in any URA audit or dispute.

3. File annual income tax returns: Returns cover the financial year from July 1 to June 30. Even if your income is below the UGX 3,820,000 threshold in a given year, filing is good practice and demonstrates a clean compliance record.

4. Address the 6% withholding in every paid engagement: Before any performance or paid appearance, confirm that your promoter, organizer, or employer is aware of and will honor their withholding obligation. Where possible, include the withholding arrangement as a term in your written contract.

5. Declare all foreign income Income earned outside Uganda must be included in your annual return. Do not treat foreign earnings as invisible to URA. They are not.

6. Consult a qualified tax professional The Income Tax Act and the Amendment Bill contain technical provisions that interact in ways that are not always intuitive. A single consultation with a registered tax consultant or tax advocate is considerably less expensive than the penalties, back taxes, and interest charges that accumulate from non-compliance.

The Bottom Line

The Income Tax (Amendment) Bill 2026/2027 does not invent new obligations for Uganda’s creative sector. It enforces obligations that have existed under the Income Tax Act (Cap 340) for years but with new tools, new mechanisms, and a clear institutional intent to bring the entertainment industry fully into the formal tax system.

The 6% withholding tax makes artists visible through their payors. The foreign income provisions close the offshore earnings gap. Together, they signal that URA is no longer treating creative income as an edge case.

The artists and creators who engage with these obligations now who register, file, and structure their engagements correctly will be in the strongest legal and financial position. Those who wait will face back taxes, penalties, and interest on earnings they assumed were invisible.

Your creative work is your livelihood. The law now treats it accordingly. So should you.

This article is for informational purposes only and does not constitute legal or tax advice. For guidance specific to your circumstances, consult a qualified tax consultant or advocate registered in Uganda.

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Introduction

Uganda’s courts are under siege. As of December 2025, the judiciary reported 198,554 pending cases, of which 48,326 were classified as backlog meaning cases that have languished in the system for more than two years. The High Court alone carries roughly 89,000 pending matters. Chief Magistrates’ Courts are not spared either, holding over 71,000 pending cases. The human cost is staggering: families divided, land contested, businesses unable to recover debts, and citizens watching their disputes age alongside them.

Against this backdrop, Uganda’s Rules Committee, chaired by Chief Justice Dr. Flavian Zeija, on 16^th March 2026 made the Judicature (Court Annexed Mediation) Rules, 2026, gazette on 27^th March 2026 as Statutory Instrument No. 14 of 2026. The new Rules repeal the older Judicature (Mediation) Rules of 2013 and represent the most comprehensive statutory framework for court-annexed mediation (CAM) Uganda has ever had. This article examines what the Rules say, what they change, and what they signal about the state of mediation in Uganda today.

The Long Road to a Mediation Culture (history of Mediation in Uganda)

Court-annexed mediation in Uganda did not emerge overnight. It evolved from both the recognition that formal adversarial litigation was failing large swathes of the population, and a pragmatic acknowledgment that Uganda simply does not have enough judicial officers to adjudicate its way out of a crisis. With roughly 700 judicial officers serving a population of over 47 million people a ratio of approximately one officer per 64,000 citizens the math has never worked.

The Judiciary piloted court-annexed mediation in select High Court circuits in cooperation with development partners such as the Justice Law and Order Sector (JLOS). These early initiatives demonstrated that mediation could ease caseload pressure while offering a faster, more amicable alternative. The Commercial Court had adopted mediation rules as far back as 2007 through the Judicature (Commercial Court Division) (Mediation) Rules, No. 55 of 2007. But it was the 2013 Rules that first gave mediation a general, court-wide footing. By 2013, however, mediation had already shown a mixed record: that year, courts recorded a disposal rate of only 60.7% through mediation, down from 73.1%, even as the number of incoming suits grew by 22.6%.

The warning signs were clear. Mediation was structurally embedded but operationally stagnating. Performance had plateaued. As the Registrar for ADR, HW Zuliaka Nanteza, observed at a 2025 mediation performance review, “while mediation has been in place since 2013, its performance had stagnated in recent years.” The 2026 Rules are the legislative response.

What the 2026 Rules Actually Say

1. Scope and Consent

The Rules apply to all civil matters where parties consent to mediation whether at trial court level or on appeal. This is important: mediation under these Rules is ‘consensual’, not compulsory. Parties must agree to have their dispute referred. A judge or magistrate may, with consent, also serve as mediator; but if mediation fails, that judicial officer immediately steps back from the case entirely (Rule 12(6)). This safeguard protects the integrity of proceedings.

The inclusion of ‘appellate mediation’ (Part V) is a notable expansion. Parties to any civil appeal before any appellate court including the Court of Appeal and Supreme Court may now voluntarily submit their dispute to mediation at any point before judgment. The Supreme Court had only just begun piloting appellate mediation in 2025, identifying an initial 14 files for the process. The 2026 Rules now give this practice a firm legal home.

2. Mediator Accreditation

Under the 2013 regime, mediator accreditation was informal and loosely supervised. The 2026 Rules introduce a rigorous, structured pathway. A person seeking to become a court accredited mediator must apply through the Chief Registrar to the Chief Justice (Rule 7). The Case Management Committee reviews applications and makes recommendations. Accreditation is only granted to persons of “high moral character and proven integrity.” An up-to-date public register of all court accredited mediators must be maintained on the Judiciary website.

Critically, the Chief Justice retains the power to suspend or revoke accreditation “at any time” (Rule 8) a blunt but necessary tool for discipline in a profession that depends entirely on trust. The accreditation framework also comes with a detailed ‘Code of Conduct’ (Schedule 2), covering self-determination, impartiality, conflict of interest, confidentiality, advertising, professional competence, and disciplinary procedures. The Code runs to several pages and establishes minimum ethical standards applicable across all mediation styles, whether in-person or online. This level of specificity is new and signals a determination to professionalize mediation practice in a way the 2013 Rules never attempted.

3. The 60-Day Clock

One of the most operationally significant provisions is Rule 23: “mediation must be concluded within 60 days from the date of referral”. This is a firm timeline. It addresses a chronic problem mediation sessions being stretched out indefinitely, parties and mediators adjourning without discipline, and the mediation registry becoming a holding bay rather than a resolution mechanism.

Supporting this, Rule 27 governs adjournments, requiring the mediator to issue a notice with a new date and file it with the court. Rule 6(b) charges the registrar or magistrate in charge of CAM with “ensuring adherence to the mediation processes, procedures and prescribed timelines.” The Code of Conduct reinforces this: a mediator must notify the court before any absence that would prevent timely allocation.

4. Government Parties

A recurring problem in Uganda’s mediation landscape has been the participation of government ministries, departments, and agencies. Without a properly authorized officer with binding powers, mediation sessions stall parties settle in the room but the agreement collapses because the government representative has no authority to bind the State.

Rules 25 and 26 address this directly. The Attorney General or a representative must support MDAs in mediation. More importantly, any settlement agreement a government official signs must first be approved by the Attorney General (Rule 25(2)). For corporations and government bodies, a written letter of authorization specifically Form 7 is required at the first mediation session. This is a practical reform aimed at the dysfunction that has undermined many mediation processes involving public entities.

5. Confidentiality as a Foundation

Part VI contains an elaborate confidentiality regime (Rule 30). All participants must sign a Confidentiality and Inadmissibility Agreement. Proceedings are private; statements made in mediation cannot be produced as evidence in any subsequent judicial or arbitral proceeding. Mediators, parties, and observers are all bound. Electronic recording of sessions is prohibited unless all party’s consent. The mediator cannot be compelled to testify in any court about the mediation.

One important carve-out: confidentiality does not protect information relating to child abuse, defilement, domestic violence, or criminal conduct (Rule 30(4)(b)). This protects against mediation being weaponized as a shield in cases involving serious harm.

6. No Fees for Parties Court Pays Mediators

Perhaps the most democratizing provision in the Rules is Rule 39: “mediators are remunerated by the court, not the parties.” Parties bear only their own costs of participation (Rule 40), such as transport and the time of their lawyers. The mediator’s fees are fully borne by the Judiciary, in accordance with guidelines issued by the Chief Justice.

This removes a significant barrier. In the old framework, parties already spending on advocates faced the additional burden of mediator fees. Poorer litigants or rural communities were effectively priced out of mediation. Under the 2026 Rules, this obstacle falls away.

The Broader Context: Mediation Within Uganda’s Justice Crisis

The 2026 Rules did not arrive in a vacuum. They are part of a broader, urgent reform agenda driven by the Judiciary’s recognition that the traditional adversarial model cannot absorb Uganda’s caseload.

In the 2024 Performance Report, courts handled 161,838 cases against a backlog of 42,588. By the 2024/25 financial year, total pending cases had risen sharply to 190,793 a 17.9% increase. The overall case disposal rate actually ‘declined’ slightly, from 59.7% to 58%. Commercial disputes alone represent cases with a combined monetary value of UGX 5.98 trillion sitting idle in the system. The Uganda Bankers’ Association has flagged this directly: unresolved disputes increase non-performing loans, constrain credit growth, and push up interest rates.

Deputy Chief Justice Zeija (then in that role) declared November 2025 “Settlement Month” and urged mediators to dedicate at least two weeks to intensive sessions. Each judicial officer is now expected to mediate at least five cases per month. The Judicial Training Institute has trained 290 judicial officers and 100 non-judicial mediators in the Eastern region alone, with court-accredited mediators already commissioned in Gulu, Mbale, Mbarara, and other regions.

The Supreme Court began piloting appellate mediation in early 2025, identifying its first files that year. The Court of Appeal followed. These upper-court expansions reflect a recognition that backlog is not a problem only in subordinate courts it runs all the way to the apex of the judicial system, where 563 cases were already classified as backlog.

There is also a cultural dimension that the Rules’ architects are clearly aware of. As Justice Khaukha of the Judicial Training Institute has noted, only about 10% of disputes in Uganda reach the formal courts. The remaining 90% are resolved through community-level, often customary mechanisms. The philosophy behind court-annexed mediation aligns with this reality: it formalizes a dispute resolution tradition that Ugandans have always practiced, bringing it within the court system’s oversight while preserving its consensual, relationship-restoring character.

Conclusion

The Judicature (Court Annexed Mediation) Rules, 2026, are a serious and substantive piece of legal architecture. They transform what was a loosely administered mediation system into a structured, professionally governed, and court-supervised alternative dispute resolution mechanism. The 60-day timeline, the court-funded mediator model, the appellate mediation framework, and the detailed Code of Conduct all represent genuine progress.

But rules alone do not resolve disputes. Uganda’s justice crisis is not merely a legislative problem. It is a resource problem, a staffing problem, and at a deeper level a mindset problem. As the Chief Justice himself has acknowledged, judicial culture has historically been adversarial, and changing that culture takes more than gazette instruments.

The government’s Fourth National Development Plan targets cutting the backlog by half and reducing it to 5.2% of total cases by 2029/30. Mediation is central to that plan. Whether the 2026 Rules provide the right tool to get there depends on whether they are accompanied by sustained funding, expanded accreditation, nationwide rollout to rural courts, and the political will to hold government ministries accountable when they sign agreements but refuse to honor them.

The Rules are, in sum, a framework for hope. Whether that hope is realised will be written not in statutory instruments, but in the lives of the thousands of Ugandans who walk into a mediation room seeking something simpler than a verdict: an end to their dispute, and the restoration of peace.

‘This article is based on the Judicature (Court Annexed Mediation) Rules, 2026 (S.I. No. 14 of 2026), the Judiciary of Uganda’s Annual Performance Reports, and publicly available reporting on Uganda’s court system as of April 2026.’

Copy of the Rule, Tap- https://www.bing.com/ck/a?!&&p=8a3246b04bc4a281419a73315dae03ce57fc8ed3d63661037f09b4a919000a8fJmltdHM9MTc3NzA3NTIwMA&ptn=3&ver=2&hsh=4&fclid=1ef98e03-02f9-6336-2a70-9d6903e762a0&psq=mediation+rules+in+uganda&u=a1aHR0cHM6Ly9qdWRpY2lhcnkuZ28udWcvZmlsZXMvZG93bmxvYWRzL1RoZSUyMEp1ZGljYXR1cmUlMjAoQ291cnQlMjBBbm5leGVkJTIwTWVkaWF0aW9uKSUyMFJ1bGVzLCUyMDIwMjYucGRm

Over the last five years, the courts of Uganda have spoken consistently, deliberately, and with remarkable clarity in favour of arbitration as a pillar of modern dispute resolution. From the boardrooms of Kampala to the floors of the Commercial Court, a quiet revolution has been underway, and the judgments speak for themselves.

This post traces that journey through the cases that have shaped Uganda’s arbitration jurisprudence between 2020 and 2025 examining how the bench has interpreted, protected, and advanced the principles that make arbitration work.

History of Arbitration in Uganda

Long before Uganda’s Commercial Court issued its first arbitration ruling, Ugandans were resolving disputes the traditional way through leaders and elders whose word carried the weight of community trust. That spirit of consensual, non-adversarial resolution never truly disappeared. It simply needed a modern framework.

The first formal step came in 1930 with the Arbitration Act. Decades later, the 1995 Constitution https://ulii.org/en/akn/ug/act/statute/1995/constitution/eng@2023-12-31 guided by the Odoki Commission embedded the values of arbitration into Uganda’s legal DNA under Article 126(2), calling for justice without delay, reconciliation, and the avoidance of undue technicalities. Parliament followed with a suite of laws to give these values teeth: The Judicature Act, the Civil Procedure Rules (S.I 71 1), and most importantly, the Arbitration and Conciliation Act (ACA) a statute that draws from the UNCITRAL Model Law on International Commercial Arbitration and places party autonomy at its very heart.

The Principles the Courts Have Consistently Upheld

1.  Party Autonomy Reigns Supreme

If there is one thread that runs through every major arbitration ruling in this period, it is this: the parties are in control. Section 9 of the ACA restricts court intervention in arbitration proceedings, and the courts have honored that restriction faithfully. In Lakeside Dairy Limited v International Centre for Arbitration and Mediation Kampala (Misc. Cause 21 of 2021) https://tinyurl.com/3cjyujh8, the court affirmed that parties have near unfettered autonomy in choosing when to arbitrate, how many arbitrators to appoint, where the arbitration sits, and what procedure governs it. The court is not there to second guess those choices it is there to respect them.

2.  The Arbitration Agreement: Meaning, Construction, and Effect

An arbitration agreement is the engine of the entire process without it, there is no arbitration. The courts have carefully defined and protected this agreement in a string of decisions.

In Security Group Uganda Limited v Finasi Ishu Construction SPV Ltd (Civil Suit No. 829 of 2023), the court treated an arbitration clause as a written submission one that must be construed according to its own language and in the light of the surrounding circumstances. The principle of separability (Section 3(4) of the ACA) was reinforced: an arbitration clause lives its own life, independent of the broader contract that contains it.

In MSS Xsabo Power Ltd & 4 Others v Great Lakes Energy Company NV (Arbitration Causes No. 0075 of 2023 and 0014 of 2024), the court articulated four hallmarks of a valid arbitration clause: it must be mandatory, it must exclude (or at least defer) court intervention, it must empower the arbitrators to resolve disputes, and it must provide a procedure leading efficiently to an enforceable award. The court added that rational commercial parties who agree to arbitrate almost certainly intend all disputes from their relationship to be resolved in the same forum and the clause should be construed accordingly.

What about badly drafted clauses? In Lakeside Dairy, the court tackled the vexed question of “pathological” arbitration clauses those so defective that they frustrate the appointment of a tribunal or create jurisdictional chaos. The principle is clear: unless a clause is so incurably flawed that it cannot function as an arbitration clause at all, courts will strain to give it effect. Only where it is truly impossible to constitute an arbitral tribunal will the court step in.

3.  Kompetenz Kompetenz: The Tribunal Judges Its Own Jurisdiction

One of the most significant doctrinal developments in this period is the courts’ robust endorsement of the Kompetenz Kompetenz doctrine the principle that an arbitral tribunal has the power to rule on its own jurisdiction. Grounded in Section 16 of the ACA and affirmed in Lakeside Dairy, this doctrine prevents parties from derailing arbitration proceedings with premature jurisdictional challenges in court. The tribunal decides first; judicial oversight comes later, and only within the narrow grounds permitted by the Act.

4.  Courts Stay in Their Lane: The Limited Intervention Principle

Perhaps the most striking theme of the 2020–2025 period is the courts’ disciplined restraint. Section 9 of the ACA is clear: courts shall not intervene except where the Act expressly permits. The cases confirm that judicial involvement is confined to three narrow channels procedural steps the tribunal cannot enforce (such as witness summonses or stays of parallel litigation), interim measures to preserve the status quo, and post award enforcement or challenge proceedings. In Simba Properties Investment Co. Ltd & 5 Others v Vantage Mezzanine Fund (Civil Application No. 231 of 2025), the court reinforced this framework, refusing to be drawn into the substantive merits of an ongoing arbitration.

Enforcing the Award: Where the Court’s Support Truly Shows

Awards Are Final and the Courts Mean It

One of arbitration’s core promises is finality. In Lakeside Dairy, the court confirmed that an arbitral award is binding on the parties, and that the substantive issues decided by the arbitrator are simply not reviewable by courts. There is no appeal on the merits. Recourse to court under Section 34 of the ACA is strictly limited to an application to set aside the award on specific, narrow grounds.

In Aya Investment (U) Limited v Industrial Development Corporation of South Africa Ltd (Civil Application No. 410 of 2023), the court went further, dismissing an application to stay execution of an arbitral award. Citing the Supreme Court in Babcon Uganda Limited v Mbale Resort Hotel Ltd, the court held that it had no jurisdiction to entertain such a stay the Act does not provide for it, and the court would not read in a power that Parliament had deliberately withheld.

Partial Awards Are Immediately Enforceable

In Great Lakes Energy Company NV v MSS Xsabo Power Limited (Arbitration Causes 2 and 5 of 2023), the court addressed a question that had lingered in Uganda’s arbitration practice: can a partial award be enforced before all disputes are resolved? The answer was an unequivocal yes. A partial award one that definitively resolves a severable issue or claim is treated as a final award for enforcement purposes under Section 36 of the ACA. This is a commercially significant ruling: it means parties who prevail on one issue need not wait for the entirety of the proceedings to collect.

Time Is of the Essence: The 30 Day Rule

Finality has a procedural counterpart: strict time limits. In National Housing and Construction Company Limited v Ambitious Construction Company Limited (Misc Cause No. 54 of 2023), the court addressed when the 30-day window to apply to set aside an award begins to run. The answer consistent with how judgments are treated is the date the award is signed and delivered, not the date a party physically collects it. The applicant in that case missed the deadline by a single day, filing on 9 June 2023 when the award had been delivered on 9 May 2023. The application was struck out. The court’s message was unambiguous: arbitration’s promise of finality cannot be diluted by procedural laxity.

Public Policy: A Narrow Exception, Not a Loophole

One of the most important contributions of this period’s jurisprudence is the court’s careful treatment of the public policy ground for setting aside awards. In MSS Xsabo Power Ltd, the court rejected the notion that public policy could become a backdoor for merits review. Public policy, the court held, is to be interpreted narrowly an award will only be set aside on this ground where it conflicts with Uganda’s Constitution or written law, is inimical to national interests such as security or economic prosperity, or is tainted by corruption or fraud. A mere disagreement with the outcome does not come close.

The Seat Matters: Supervisory Jurisdiction and Award Challenges

For those engaged in international commercial arbitration seated in Uganda, the courts’ position on supervisory jurisdiction is clear and reassuring. In Great Lakes Energy, Justice Stephen Mubiru affirmed that the courts of the seat of arbitration hold exclusive supervisory jurisdiction over the proceedings, including any challenge to the award. A choice of seat is treated as a choice of forum for remedies. This brings Uganda’s approach in line with international best practice and gives foreign parties confidence that choosing Kampala as a seat is a choice the courts will honour.

What This Means for Businesses and Legal Practitioners

Taken together, the decisions of Uganda’s courts from 2020 to 2025 paint a coherent and encouraging picture. The bench is not merely tolerating arbitration it is actively enabling it. The consistent themes are: respect party choices, enforce agreements broadly, uphold awards firmly, intervene only when the Act permits, and protect finality with strict procedural discipline.

For businesses operating in Uganda whether in energy, construction, real estate, or finance this jurisprudence carries a practical message: arbitration clauses in your contracts will be taken seriously, your awards will be enforced, and the courts will not undermine the process you chose. Draft your clauses carefully, respect your deadlines, and trust the system.

For legal practitioners, the body of case law reviewed here is not just persuasive it is a road map. Understanding how courts approach arbitration agreements, jurisdictional challenges, enforcement, and public policy is now essential practice knowledge for any commercial lawyer in Uganda.

Cases Reviewed

1. Lakeside Dairy Limited v International Centre for Arbitration and Mediation Kampala and Another (Misc Cause 21 of 2021) [2021] UGCommC 181 (22 October 2021)
2. Simba Properties Investment Co. Ltd & 5 Ors v Vantage Mezzanine Fund II Partnership & Vantage Mezzanine Fund II Proprietary Ltd, Civil Application No. 231 of 2025
3. Great Lakes Energy Company NV v MSS Xsabo Power Limited and Others (Arbitration Causes 2 of 2023 & 5 of 2023) [2020] UGCommC 165 (24 April 2020)
4. National Housing and Construction Company Limited v Ambitious Construction Company Limited, Miscellaneous Cause No. 54 of 2023
5. Aya Investment (U) Limited v Industrial Development Corporation of South Africa Ltd, Civil Application No. 410 (542) of 2023
6. Security Group Uganda Limited v Finasi Ishu Construction SPV Ltd, Civil Suit No. 829 of 2023
7. MSS Xsabo Power Ltd & 4 Others v Great Lakes Energy Company NV, Arbitration Causes No. 0075 of 2023 and 0014 of 2024

1. Background

On 1 April 2026, the Ministry of Finance, Planning and Economic Development tabled proposed tax changes for the financial year 2026/2027 before the Parliament of Uganda. If passed into law and assented to by the President, the changes take effect on 1 July 2026. The proposals span eight legislative instruments: The Income Tax (Amendment) Bill 2026; the Value Added Tax (Amendment) Bill 2026; the Excise Duty (Amendment) Bill 2026; the Tax Procedures Code (Amendment) Bill 2026; the Stamp Duty (Amendment) Bill 2026; the Lotteries and Gaming (Amendment) Bill 2026; the External Trade (Amendment) Bill 2026; and the Traffic and Road Safety (Amendment) Bill 2026.

This opinion analyses each set of proposed amendments, setting out the current legal position, the proposed change, and commentary on the likely legal, practical, and fiscal implications. Several proposals represent direct legislative responses to Tax Appeals Tribunal (TAT) jurisprudence, reflecting the growing influence of case law on Uganda’s tax policy landscape.

A. Income Tax Act Proposed Amendments

1. Definition of ‘Royalty’  Software (s.2 ITA; Clauses 2 & 10)

Current Law: The definition of ‘royalty’ under the ITA does not expressly include software. Payments for software access risked being characterised as digital services and taxed at the 5% Digital Services Tax rate.

Proposed Change: Software is expressly included in the definition of ‘royalty’. Income attributable to royalties shall not be taxed as digital services but shall instead be subject to a 15% withholding tax on gross payments.

2. Interest Limitation Rules & EBITDA (s.25(3) ITA; Clause 6)

Current Law: Interest expense deduction for group companies is capped at 30% of EBITDA. ‘Group’ was broadly defined (common ownership ≥51%), enabling URA to apply the limitation to companies sharing ownership even with dormant entities. Brought-forward losses were included in EBITDA, overstating disallowed interest.

Proposed Change: A ‘group’ is redefined to exclude dormant members. A ‘dormant company’ is defined as an entity with no business operations and no accounting transactions in a year of income. Brought-forward losses are excluded from the Tax EBITDA computation.

Opinion & Commentary: Addresses multiple TAT decisions, including Techno Three Ltd v URA (TAT No. 9/2025) and Sai Office Supplies v URA (TAT No. 12/2024). Provides clarity and fairness. However, the definition of ‘dormant’ requires refinement   routine statutory filings (e.g., URSB annual return fees) should not disqualify an entity. Further alignment with OECD BEPS Action 4 is recommended: apply limitation to net rather than gross interest, and exclude local group companies.

3. Alternative Minimum Tax (AMT) (s.36 ITA; Clause 8)

Current Law: Taxpayers with carry-forward losses paid no corporate income tax. Full loss carry-forward was permitted for 7 years; thereafter a 50% deduction applied with no further tax consequence.

Proposed Change: Companies with assessed tax losses for more than 7 consecutive years must pay the higher of: (a) regular corporate income tax of 30% of chargeable income, or (b) an AMT of 0.5% of gross income   even where chargeable income is nil.

Opinion & Commentary: This is a controversial measure and Parliament’s second attempt, having rejected an equivalent provision in the ITA Amendment Bill 2020. It departs from the foundational principle of taxing profits. Capital-intensive and cyclical sectors   mining, oil & gas, and infrastructure   legitimately carry extended losses. The ITA already contains anti-avoidance and transfer pricing provisions. This measure risks worsening the position of genuinely struggling businesses, with possible downstream loss of PAYE and VAT revenue.

4. Withholding Tax on Non-Business Asset Disposals (s.130 ITA; Clauses 3 & 13)

Current Law: WHT under s.130 ITA applied only to: (a) purchase of an asset from a nonresident, and (b) purchase of a business asset. Disposal of non-business assets was not a taxable event for WHT purposes.

Proposed Change: Disposal of non-business assets is now classified as taxable ‘property income’. A 6% WHT (not a final tax) is imposed on the purchaser, to be remitted to URA. The seller must still file a return and settle any additional tax arising.

Opinion & Commentary: An overreach. The Bill does not define ‘non-business asset’ nor provide exceptions. This could capture sales of personal vehicles, household items, personal land, and shares traded on the stock exchange. TAT precedent in Chandaria Foundation v URA (TAT No. 331/2024) and Dr. Amos Nzeyi v URA (TAT No. 5/2024) confirms that non-business disposals are not profit-motivated. Enforcement and compliance risks are significant.

5. Taxation of Foreign-Sourced Income (New s.150A ITA; Clause 18)

Current Law: Resident individuals were required to declare worldwide income to URA, but foreign-sourced income was effectively subjected to higher rates than equivalent Uganda-sourced income under the existing legislative structure.

Proposed Change: A new s.150A is inserted: income derived by a resident individual from a foreign source shall be taxed at the same rate applicable to the equivalent Uganda-sourced income type. URA gains enhanced visibility via automatic exchange of information (AEOI) protocols.

Opinion & Commentary: A welcome and equity-restoring measure that creates parity and is expected to encourage voluntary compliance. Residents who previously under-declared foreign income should note increased URA scrutiny following the activation of AEOI protocols.

6. Revised Individual Income Tax Bands (Clause 20)

Current Law: Tax-free threshold: UGX 235,000/month. Bands: 10% (235K–335K); 20% (335K–410K); 30% (410K–10M); 40% (above 10M).

Proposed Change: Revised bands: 0%: 0–335,000; 20%: 335,000–410,000; 25%: 410,000–485,000; 30%: 485,000–10,000,000; 40%: above 10,000,000.

Opinion & Commentary: A modest adjustment to address cost-of-living increases since 2012 (CPI rose approximately 74% by February 2026). However, an inflation-adjusted analysis shows the new free threshold of UGX 335,000 should ideally be UGX 408,384, and the 40% bracket threshold should be approximately UGX 17.4 million. The adjustment is a step in the right direction but falls significantly short of full inflationary correction.

7. WHT on Gaming & Betting Winnings (s.131 ITA; Clause 14)

Current Law: No WHT applied on gaming winnings   the tax was repealed in 2023 following Fortuna Ltd v URA (TAT No. 132/2020), which disputed the interpretation of ‘winning’ and the point of collection.

Proposed Change: A 15% WHT is reinstated on ‘winnings’, defined as the difference between the payout and the amount staked on the game or bet.

Opinion & Commentary: The new definition of ‘winnings’ as the net gain (payout minus stake) resolves the ambiguity identified in Fortuna and aligns with Massalia SMC Ltd v URA (TAT No. 251/2024). A pragmatic, jurisprudence-driven amendment.

8. WHT on Telecom Commissions (s.133 ITA; Clause 15)

Current Law: 10% WHT applied to commissions paid to airtime and mobile money agents only. Commissions for data distribution and other telecommunications services were outside the WHT net.

Proposed Change: WHT is broadened to all commissions paid by telecom service providers for retail services, mobile network services, and mobile money   including data agents. For individual agents, this WHT constitutes a final tax.

Opinion & Commentary: A sensible broadening of the tax base. However, the terms ‘telecommunication retail services’ and ‘mobile network services’ are broad and could unintentionally capture parties outside the intended target. Clear definitional boundaries are recommended before enactment.

9. WHT on Public Entertainers (Clause 16)

Current Law: WHT applied to designated agents, professionals, and insurance/advertising/mobile money commissions. Payments to resident public entertainers were not subject to WHT (nonresidents: 15% WHT).

Proposed Change: A new 6% WHT is imposed on gross payments to public entertainers (resident or otherwise), payable by the person making the payment   principally promoters.

Opinion & Commentary: Expands the tax base and brings resident entertainers within a withholding framework. Promoters must now ensure compliance or risk WHT liability. A clear statutory definition of ‘public entertainer’ is needed for consistent application.

10. Transfer Pricing   Arm’s Length Obligation (New s.115A ITA; Clause 11)

Current Law: Related-party transactions were expected to follow the arm’s length principle under Transfer Pricing Regulations and URA Practice Notes, but no explicit legislative obligation existed in the primary Act.

Proposed Change: A new s.115A is inserted, expressly obligating taxpayers in controlled transactions to prove compliance with the arm’s length principle.

Opinion & Commentary: Effectively a codification and emphasis of an existing obligation. Signals intensified URA focus on transfer pricing. Multinationals and local related-party entities should immediately review TP documentation and assess exposure to adjustments and penalties for non-compliance.

11. Tourism Hotel Tax Exemption (s.21 ITA; Clause 4)

Current Law: No income tax holiday existed for tourism hotel developers.

Proposed Change: An income tax exemption is granted to developers of qualifying tourism hotels/facilities: minimum investment of USD 10 million (foreign) or USD 5 million (citizen); at least 70% local raw materials; at least 70% citizen employees earning at least 70% of the total wage bill.

Opinion & Commentary: Supports Uganda’s tourism growth strategy. However, unlike other ITA holidays (typically subject to 10-year limits), this exemption is open-ended   which may be unintentional and should be clarified. The investment thresholds may also exclude smaller tourism projects that nonetheless support the ecosystem.

B. Value Added Tax Act   Proposed Amendments

1. VAT Registration Threshold (s.7(2) VAT Act; Clause 3)

Current Law: Annual turnover threshold for compulsory VAT registration: UGX 150 million (or UGX 37.5 million per quarter).

Proposed Change: Threshold raised to UGX 250 million annually. Businesses below this threshold have no obligation to register or charge VAT.

Opinion & Commentary: Long overdue relief for small businesses that bore disproportionate compliance costs while contributing minimally to VAT revenue. Expected to result in de-registration of many smaller taxpayers, freeing URA resources to focus on larger taxpayers and improve the VAT register’s productivity.

2. Input VAT Credit   Hotel/Tourism Developers (s.28(3) VAT Act; Clause 4)

Current Law: Input tax credit was available for goods on hand at the VAT registration date, incurred within 6 months (or 12 months for manufacturers).

Proposed Change: Developers of qualifying hotels/tourism facilities (USD 10 million foreign / USD 5 million citizen) may claim input VAT on specified construction materials, civil works, machinery, and fittings incurred not more than 2 years prior to commissioning.

Opinion & Commentary: Reduces the effective VAT cost of hotel development. However: (a) the USD investment threshold excludes smaller tourism projects; (b) the 2-year window may be insufficient for projects experiencing delays   a 3-year window is recommended; and (c) investors with USD 8 million+ may already qualify for VAT exemption under Schedule 3 of the VAT Act.

2. VAT Withholding   EFRIS Exemption (Clause 2)

Current Law: Designated taxpayers were required to withhold VAT on all taxable supplies unless the supplier was expressly exempt.

Proposed Change: The VAT withholding obligation is restricted to non-EFRIS transactions: it applies where no e-invoice/e-receipt is issued by a VAT-registered vendor, or where an unregistered vendor’s supply exceeds one quarter of the VAT registration threshold and no EFRIS document is issued.

Opinion & Commentary: A well-designed compliance incentive   suppliers who comply with EFRIS are rewarded with improved cash flow, as no VAT is withheld at source. Designated withholding agents must review procurement processes and update their systems accordingly.

3.Input VAT Disallowed on Imported Software (s.28 VAT Act; Clause 4)

Current Law: Input tax incurred at Customs on imported software was claimable where the software was for business use.

Proposed Change: Input VAT credit on imported software declared at Customs is disallowed. This represents an effective cost increase of at least 18% on physical software imports.

Opinion & Commentary: A revenue measure that fails to consider wider economic impact. Businesses accessing software digitally   the majority   already bear 18% VAT as an imported service. This amendment targets the smaller category of physical-media software imports. It discourages technology adoption and risks deepening the digital divide and reducing Uganda’s regional competitiveness.

4. EFRIS Consumer Reward (Clause 7)

Current Law: Non-VAT registered persons who purchased from VAT-registered suppliers could claim a 5% refund on qualifying purchases exceeding UGX 5 million within 30 consecutive days.

Proposed Change: The qualifying threshold is lowered to UGX 2 million within 30 days. The 5% VAT refund incentive is retained.

Opinion & Commentary: Expands EFRIS adoption by broadening the incentive to smaller-value transactions. Expected to strengthen compliance culture and improve VAT accountability across more consumer segments.

5. VAT Exemption   Nuclear Energy Supplies (Third Schedule; Clause 9)

Current Law: The VAT exemption for energy project contractors/subcontractors applied to hydro, solar, geothermal, biogas, and wind energy projects.

Proposed Change: The exemption is extended to nuclear energy project supplies.

Opinion & Commentary: Aligns with the Government’s nuclear energy programme (developed with Korean Government support). Reduces input costs for project developers. Note: biomass energy projects remain uncovered   an omission that should be addressed in subsequent amendments.

C. Stamp Duty Act   Proposed Amendments

1. Stamp Duty on Transfers (Clause 4)

Current Law: Stamp duty on transfers of land and shares (excluding motor vehicles) was 1.5% of consideration or market value.

Proposed Change: Rate increased to 3% of total value   a 100% increase.

Opinion & Commentary: An extreme increase that will materially raise the cost of property and share transactions in Uganda, with the real estate sector bearing the greatest burden. High transaction taxes tend to incentivise evasion and artificial structuring. A moderate increase to 2% would be more defensible.

2. Stamp Duty on Motor Vehicle Registration/Transfer (Clause 4)

Current Law: No stamp duty applied to motor vehicle or motorcycle registration or transfer. Insurance of motor vehicles attracted stamp duty of UGX 35,000 per policy.

Proposed Change: New stamp duty imposed: motorcycles/tricycles/quadricycles   UGX 50,000; all other motor vehicles   UGX 200,000.

Opinion & Commentary: Targets an already heavily taxed sector. Combined with the proposed UGX 500,000 excise duty at first motorcycle registration, the total first-registration tax burden on a motorcycle rises to UGX 550,000   a significant cost for an asset central to livelihoods for millions of Ugandans. An anomaly also arises: insured vehicles will now bear both the new stamp duty and the existing UGX 35,000 insurance policy stamp duty.

3. Monthly Stamp Duty Returns   Financial Institutions (s.7 Stamp Duty Act; Clause 2)

Current Law: The filing obligation under s.7 applied to insurance/takaful businesses only.

Proposed Change: The obligation is extended to all financial services entities (banks, MFIs, lenders), with monthly returns required. Penalty for default: 2% per month of duty payable.

Opinion & Commentary: Provides URA with systematic visibility over stamp duty-liable transactions in the financial sector. Financial institutions should review compliance frameworks and ensure adequate reporting systems. The law should further specify which entities fall within ‘financial services’ to avoid ambiguity.

D. Excise Duty Act   Proposed Amendments

1. Imported Spirits (Item 3)

Current Law: Excise duty on imported undenatured spirits (<80% ABV): 80% or UGX 1,700 per litre, whichever is higher.

Proposed Change: Increased to 80% or UGX 3,500 per litre   a 105.9% per-litre rate increase.

Opinion & Commentary: Targets a luxury consumption category with relatively price-inelastic demand. However, exorbitant increases risk encouraging smuggling and illicit trade, ultimately reducing total revenue. Careful monitoring of border compliance is warranted.

2. Cement & Construction Materials (Item 7)

Current Law: UGX 500 per 50kg on cement, adhesives, grout, white cement, and lime.

Proposed Change: Doubled to UGX 1,000 per 50kg.

Opinion & Commentary: A 100% increase that will directly raise construction costs across housing, infrastructure, and public works. Combined with 18% VAT on these materials, the effective burden is significant. This will adversely affect housing affordability and government contract costs.

3. Fuel   Motor Spirit & Gas Oil (Item 8)

Current Law: Motor spirit: UGX 1,550 per litre. Gas oil: UGX 1,230 per litre.

Proposed Change: Motor spirit: UGX 1,750 per litre (+12.9%). Gas oil: UGX 1,430 per litre (+16.3%).

Opinion & Commentary: Fuel duties carry economy-wide inflationary effects. Given current global oil supply disruptions and rising prices, this is a particularly inopportune moment for further increases. The measure risks amplifying inflation and transportation costs across all sectors.

4. Sugar (Item 9)

Current Law: UGX 100 per kg on cane or beet sugar and chemically pure sucrose.

Proposed Change: Increased to UGX 300 per kg   a 200% increase.

Opinion & Commentary: Excessive. Sugar is a staple commodity consumed across all income brackets. This increase will have visible price impacts for consumers and manufacturers alike. A more moderate adjustment would be appropriate.

5. Single-Use Plastics (Item 11)

Current Law: Excise duty of 2.5% or USD 70 per ton on sacks and bags (kavera) of polymers of ethylene. Other single-use items (cups, plates, straws) were not covered.

Proposed Change: Extended to all single-use plastics. Rate increased to 25% or USD 1,500 per ton   an increase of over 2,042%.

Opinion & Commentary: While framed as an environmental tax, the increase is extreme. At this rate, a prohibition may be a more rational policy instrument than taxation. There is no clear pathway for affected businesses to transition to alternatives without significant disruption to jobs and supply chains.

6. Cooking Oil & Cooking Fat (Items 18 & 29)

Current Law: Cooking oil: UGX 200 per litre. No duty on cooking fat.

Proposed Change: Cooking oil doubled to UGX 400 per litre. A new duty of UGX 500 per litre or kg is imposed on cooking fat (margarine and trans fatty acids).

Opinion & Commentary: Both are household essentials and key inputs for the hospitality and food manufacturing sectors. The increases will contribute to cost-of-living pressures and reduce margins for restaurants, bakeries, and caterers.

7. Paints, Varnishes & Lacquers (Item 28)

Current Law: No excise duty on paints, varnishes, or lacquers.

Proposed Change: New duty introduced: locally manufactured   3% or UGX 50 per litre/kg (whichever is higher); imported   10% or UGX 2,000 per litre/kg (whichever is higher).

Opinion & Commentary: The differential rate (3% local vs. 10% imported) incentivises domestic manufacturing. However, the measure increases construction costs and will be passed on to tenants and home buyers. Imported paints are predominantly used in premium construction, making the 10% rate relatively targeted.

E. Tax Procedures Code Act   Proposed Amendments

1. Penalty Reduction   Unstamped Goods (s.21(3) TPCA; Clause 2)

Current Law: Penalty for possession of unstamped goods: double the tax due OR 2,500 currency points (UGX 50 million)   widely regarded as disproportionate.

Proposed Change: Penalty reduced to double the tax due OR 100 currency points (UGX 2 million), whichever is higher.

Opinion & Commentary: A proportionality reform that reduces the risk of over-enforcement on businesses caught with technically non-compliant goods. Businesses in excisable goods sectors should nonetheless ensure tax stamps are properly affixed.

2. Remission of Pre-2016 Tax Arrears (Clause 3)

Current Law: Tax arrears arising before 30 June 2016 remained on taxpayer ledgers and were subject to enforcement   including principal tax, penalties, and interest.

Proposed Change: All principal tax arrears outstanding as at 30 June 2016 and still unpaid as at 1 July 2026 shall be written off.

Opinion & Commentary: Pragmatic debt management. Carrying decade-old liabilities distorts tax ledger performance, creates administrative burden, and imposes phantom liabilities on taxpayers. A welcome measure for those with long-standing historical debts.

3. EFRIS Penalty Amendment (s.93 TPCA; Clause 4)

Current Law: Penalty for failure to use EFRIS/EFD or issue an e-invoice/e-receipt: double the tax due on goods or services.

Proposed Change: Revised to double the tax due OR UGX 200,000, whichever is higher   providing a workable floor penalty for smaller transactions.

Opinion & Commentary: Drives EFRIS compliance with a proportionate enforcement mechanism. Businesses in newly gazetted EFRIS sectors should prioritise compliance to avoid the revised penalties.

F. External Trade Act   Proposed Amendments

1. Exemption of Essential Medicines & Agricultural Inputs (ss.3A & 3B External Trade Act; Clause 2)

Current Law: An infrastructure levy of 1.5% and an import declaration fee of 1% applied to all imported goods, including vaccines, medicines, medical supplies, pesticides, and insecticides.

Proposed Change: Vaccines, medicines, medical supplies, pesticides, rodenticides, acaricides, and insecticides are exempted from both the infrastructure levy and the import declaration fee.

Opinion & Commentary: An important public health and food security measure. The Ministry of Health raised concerns that these levies contributed to stock-outs of critical healthcare products. This will reduce landed costs for pharmaceutical and agro-input importers. Importers should monitor the effective date carefully.

2. Surcharge on Used Clothing Imports (s.3 External Trade Act; Clause 4)

Current Law: A 15% surcharge applied to used clothing imports   intended to protect the domestic textile industry but insufficient to deter large-scale imports.

Proposed Change: Surcharge doubled to 30% of CIF value.

Opinion & Commentary: Signals the Government’s commitment to discouraging Mulumba imports and supporting local textile manufacturing. However, consumers who rely on affordable second-hand clothing   particularly lower-income households   will bear the direct cost impact of this policy shift.

3. Environmental Levy on Worn Clothing (External Trade Act; Clause 3)

Current Law: No environmental levy was specifically targeted at worn/second-hand articles.

Proposed Change: A new environmental levy of 30% of CIF value is imposed on worn clothing and other worn articles.

Opinion & Commentary: Stacked on top of the increased surcharge, worn clothing imports now face a combined additional burden of 60% (30% surcharge + 30% environmental levy). This effectively renders mass-market Mulumba imports commercially unviable   a de facto prohibition through taxation. The Government should clarify whether this is the intended policy outcome.

G. Traffic & Road Safety Act   Proposed Amendments

1. Maximum Vehicle Age for Import (s.15 Traffic & Road Safety Act; Clause 2)

Current Law: Vehicles up to 15 years old from the year of manufacture could be imported. An environmental levy of 50% of CIF value applied uniformly to vehicles 9 years or older.

Proposed Change: Maximum permissible age reduced to 13 years. A graduated environmental levy applies: 9 years   20%; 10 years   30%; 11 years   40%; 12 years   50%; 13 years   unchanged. Transition provision: vehicles in transit before commencement and arriving by 31 December 2026 are unaffected.

Opinion & Commentary: A dual environmental and fleet-modernisation policy. Reducing the maximum import age from 15 to 13 years will raise average vehicle prices, as newer used vehicles command higher premiums. The graduated levy is more equitable than the previous flat rate. The transition provision for in-transit vehicles is practical and should be noted by importers.

H. Lotteries and Gaming Act   Proposed Amendments

1. Betting & Gaming Tax Rate (Fourth Schedule, Lotteries & Gaming Act)

Current Law: Betting activity: 20% of total amounts staked less payouts. Gaming activity: 30% of total amounts staked less payouts.

Proposed Change: Both betting and gaming activities are to be taxed at 30% of total amounts staked less payouts for the filing period.

Opinion & Commentary: Eliminates the differential treatment between betting and gaming. Effectively increases the tax burden on betting operators by 50%. Operators should expect reduced profit margins and may adjust odds or pricing. Long-term player participation could be affected. The ITA also introduces a 15% WHT on individual winnings (as defined above), compounding the overall tax burden on the sector.

2. Conclusion

The FY 2026/2027 tax proposals reflect a dual policy objective: expanding the tax base and increasing revenue to finance the national budget, while selectively incentivizing strategic sectors (tourism, energy, and agriculture). Taken in their totality, 50 legislative changes are proposed across 8 Acts.

Notable positives include: the raise of the VAT registration threshold; the tourism hotel tax holiday; the EFRIS compliance incentive framework; the remission of pre 2016 tax arrears; the extension of bad debt deductions to MFIs; the clarification of the EBITDA/group interest limitation rules; and the exemption of essential medicines from trade levies.

Areas of concern include: the Alternative Minimum Tax on loss making companies; the non-business asset disposal tax (undefined scope); the doubling of stamp duty on transfers; the extreme excise duty increases on plastics and sugar; the stacked levies on used clothing; and the fuel duty increase given the global supply environment. Several of these proposals risk incentivizing avoidance, reducing investment, and increasing the cost of living without proportionate revenue gains.

Taxpayers across all sectors   individual, corporate, and institutional   should conduct proactive compliance reviews to identify amendments affecting their specific circumstances and ensure timely adaptation before the 1 July 2026 effective date.