Mp Karim Masaba speaks about the business earning below UGX 350 million a year will pay not be required tp register for vat.
MP Karim Masaba Addresses VAT Registration Threshold for Small BusinessesKampala, Uganda – Member of Parliament for Mbale Industrial Division, Hon. Karim Masaba, has spoken out on proposed changes to Uganda’s Value Added Tax (VAT) regime, highlighting relief for smaller businesses as the Value Added Tax (Amendment) Bill, 2026, makes its way through Parliament.
In recent parliamentary debates, Masaba noted that under the reforms, businesses earning below UGX 250 million annually will not be required to register for VAT starting from July 2026. The current threshold stands at UGX 150 million in annual taxable turnover.
He emphasized that this adjustment aims to reduce the compliance burden on small and medium enterprises (SMEs).
During discussions on the floor of Parliament and in committee reports, Masaba argued that the government’s initial proposal of UGX 250 million was still too low. He pushed for a higher threshold of up to UGX 500 million per annum, which he said would better support business growth.
“A proposal of UGX 250 million per annum is too low, as it translates to daily sales of about UGX 700,000,” Masaba stated. He advocated for the higher UGX 500 million threshold, equating to roughly UGX 1.4 million in daily sales, describing it as a significant fiscal policy move that would ease administrative and compliance costs for both taxpayers and the Uganda Revenue Authority (URA).
Parliament ultimately passed the VAT Amendment Bill with an increased threshold, reported in some updates as rising to UGX 250–300 million, providing relief to many SMEs while allowing the URA to focus enforcement on larger, higher-earning entities. Masaba, who presented elements of the committee’s report, welcomed the direction of the reforms aimed at easing compliance, improving tax administration, and attracting investment.
The changes form part of broader tax measures for the FY 2026/27 budget, intended to support SMEs by shifting the focus of VAT administration away from smaller operations. Traders and business groups had lobbied for even higher thresholds, arguing that lower ones still impose significant costs on micro and small enterprises.
Hon. Masaba’s intervention underscores ongoing efforts in Parliament to balance revenue collection with fostering a conducive environment for business growth, particularly for domestic enterprises navigating post-pandemic economic challenges. The bill now awaits further processes before full implementation, with the new threshold expected to take effect from July 2026.
Business owners are advised to consult the URA for guidance on compliance once the law is gazetted.
Posts
0 Comments