Parliament passes the Value Added Tax (VAT) Amendment Bill 2026

Parliament has passed the Value Added Tax (VAT) Amendment Bill 2026, rejecting the proposal to exempt petrol stations from using the Electronic Fiscal Receipting and Invoicing Solution (EFRIS) system. Additionally, the bill includes exemptions for items related to the development of nuclear energy.

 

The proposal to exempt petrol stations was introduced by Nathan Nandala Mafabi, the Member of Parliament for Budadiri West. He argued that petrol stations should not be mandated to use the EFRIS system, as fuel pumps in the country cannot issue electronic receipts.

 

However, the minister countered this argument, stating that he receives electronic receipts every time he refuels. During the second reading of the VAT bill, State Minister for Finance Henry Musasizi noted that the primary goal of the bill is to simplify VAT collection, with the government expecting to collect 353 billion shillings. The bill raises the VAT threshold for businesses from 150 million shillings to 300 million shillings. Initially, the government proposed increasing the threshold to 250 million shillings, a position supported by Parliament’s finance committee. However, opposition leader and Mbale industrial division MP Karim Masaba suggested that it should be increased to 500 million shillings.

 

Musasizi explained that research showed the government could collect 349.6 billion shillings with a threshold of 250 million shillings, and 358.3 billion shillings if increased to 300 million shillings. This data led Masaba to request an increase to 300 million shillings, which the minister accepted.

 

Parliament has also passed a proposal to exempt United Nations-related agencies and specialized agencies from taxation. This includes entities such as the Arab Bank for Economic Development in Africa, the Medical Research Council, the Uganda Virus Research Institute, and the London School of Hygiene and Tropical Medicine. Additionally, the proposal to include nuclear energy as one of the exempt supplies has been approved. Furthermore, the government has agreed to withdraw the proposal to impose a 17 percent VAT on software after the Member of Parliament for Kampala Central highlighted that software is an essential component of digitization. The minister concurred with this perspective.