Kampala, Uganda – In a significant move to address critical operational tax challenges faced by Ugandan manufacturers, the Uganda Manufacturers Association (UMA), through its Economic and Business Policy committee, recently hosted its second quarterly engagement with the Uganda Revenue Authority (URA). The dialogue, led by Mr. Abel Kagumire, URA’s Commissioner of Executive Operations, brought together industry stakeholders and manufacturers to tackle issues impacting business operations, tax compliance, and overall policy.

The engagement underscores a concerted effort to foster a more business-friendly tax environment, crucial for driving Uganda’s industrial growth and enhancing its regional competitiveness. Key focus areas of the discussion included improving tax compliance mechanisms and addressing prevailing policy challenges that hinder the manufacturing sector.

Manufacturers have consistently highlighted several tax-related operational bottlenecks. Among the pressing concerns are the complexities surrounding tax administration, the burden of compliance, and the implications of new and existing tax policies on their bottom line and expansion capabilities. Recent discussions, as highlighted in a UMA press release from early May 2025, have delved into specific areas such as tax dispute resolutions, the efficiency of customs procedures for imported machinery and raw materials, the perceived burden of frequent audits, delays in duty remission schemes, the cost implications of the Digital Tax Stamp (DTS) system, and hurdles in regional trade.

Adding to the dynamic landscape, Ugandan manufacturers are also bracing for the Tax Amendment Bills 2025, anticipated to take effect from July 1, 2025. These reforms propose significant changes across Income Tax, VAT, Excise Duty, and other tax laws. While some amendments aim to stimulate local economic activity, such as potential income tax holidays for new Small and Medium Enterprises (SMEs) and incentives for local value addition, others, like adjustments in excise duties and new VAT enforcement for importers, will require careful navigation by businesses.

A particularly contentious issue for the manufacturing sector has been the tax dispute resolution framework, with UMA actively advocating for reforms. The requirement for a 30% upfront payment of a disputed tax assessment before it can be challenged has been cited as a major impediment, potentially crippling cash flow for businesses, regardless of the dispute’s final outcome. UMA’s position is that resolving such bottlenecks is key to unlocking significant capital that could be reinvested into production, innovation, and expansion.

The ongoing dialogue between UMA and URA, including the recent engagement led by Mr. Kagumire, signals a commitment from both sides to find common ground. URA has been actively involved in taxpayer education and sensitization campaigns, including on the Electronic Fiscal Receipting and Invoicing System (EFRIS) and Digital Tax Stamps, aiming to improve voluntary compliance.

The overarching goal of these engagements is to streamline tax processes, ensure that tax policies are responsive to the needs of the manufacturing sector, and ultimately create an environment where businesses can thrive. By addressing these operational tax issues head-on, Uganda aims to bolster its manufacturing base, attract further investment, create employment, and strengthen its economic standing within the East African region and beyond. The outcomes of these continued discussions will be keenly watched by the business community, as they hold the potential to significantly shape the future of manufacturing in Uganda.