Traders in Kikuubo, a busy business hub in the heart of Kampala
Government is proposing offering tax exemption to startup businesses so as to encourage them to grow.
The revelation was made by Henry Musasizi, Minister of State for Finance while appearing before Parliament’s Finance Committee to present the seven Tax Bills for FY 2025/2026.
“We have proposed a three-year income tax holiday for startup businesses established by citizens after 1st of July of 2025. Many startups struggle with high startup costs limiting their ability to grow,” Musasizi said, adding: “This incentive is aimed at fostering innovation, encouraging the formalisation of small and medium enterprises, enhancing business survival rates, and promoting job creation. In addition, this tax holiday will reduce their tax burden, foster entrepreneurship, boost domestic investment, and accelerate economic transformation.”
Government is also proposing a waiver of interest and penalty for voluntary payment of outstanding principal tax to generate Shs200 billion in revenue. “.. we propose extending the waiver of any interest and penalties outstanding as of 30th June 2024, provided that the taxpayer pays the principal tax by 30th June 2026,” he said, adding that voluntary compliance has led to increased tax revenue collection and reduced the burden on URA enforcement mechanism.
He added that it has also provided relief to businesses and individuals, enabling them to settle outstanding tax liabilities and resume normal operations.
