His refusal t approve the two laws technically delays the implementation of some of the government’s proposed tax measures barely two weeks into the 2026/27 financial year. The President’s decision means the disputed provisions cannot take effect until Parliament reviews his recommendations and passes revised legislation.
Until then, the existing tax regime remains in force, creating uncertainty for businesses affected by the proposed changes while postponing implementation of tax measures the government had planned for the new financial year.
Deputy Speaker Thomas Tayebwa announced the President’s decision during Tuesday’s plenary sitting, informing Members of Parliament that Museveni had returned both Bills for reconsideration under Article 91 of the Constitution.
“The President is against the passing into law of Clause 11 of the Income Tax Amendment Bill, 2026,” Tayebwa told the House before reading the President’s message.
Core to the President’s objections is a proposal to introduce a withholding tax on winnings from betting and gaming activities while exempting winnings from land-based casinos licensed under the Lotteries and Gaming Act, 2016.
Museveni argued that the exemption would create unequal treatment between businesses undertaking similar economic activities and provide opportunities for operators to avoid tax by restructuring their transactions.
“The exemption creates opportunities for tax avoidance and revenue leakage,” the President wrote, adding that there was no justification for taxing one category of gaming operator while exempting another.
His objection reflects broader concerns about designing a tax regime for Uganda’s rapidly expanding gaming industry, where policymakers are seeking to increase domestic revenue without distorting competition or creating loopholes that undermine tax collection.
The President also rejected Parliament’s proposal to increase excise duty on single-use plastics from the current rate of 2.5 percent or US$70 per tonne, whichever is higher, to 25 percent or US$1,500 per tonne, whichever is higher.
While Parliament approved the increase to discourage plastic pollution and strengthen environmental protection, Museveni said the proposed tax increase was too steep and risked imposing high costs on manufacturers.
He argued that Uganda’s manufacturing sector is not yet ready to transition away from plastic packaging because affordable alternatives remain limited.
According to the President, introducing such a substantial tax increase at this stage could raise production costs, discourage investment and affect employment in the sector.
The disagreement highlights the difficult balance the government faces between raising domestic revenue, protecting the environment and maintaining the country’s competitiveness as a manufacturing economy.
The Income Tax and Excise Duty Amendment Bills form part of the annual package of tax laws that ordinarily take effect at the beginning of each financial year.
With the 2026/27 financial year already underway, the return of the Bills means the contested tax measures cannot be implemented until Parliament completes reconsideration and the President assents to the revised legislation.
For businesses, particularly betting companies, casino operators and manufacturers of plastic products, the decision means the current tax regime remains in place for now.
While this provides temporary certainty, it also prolongs uncertainty over the final tax framework that will govern their operations during the financial year.
For the government, the delay means implementation of the disputed revenue measures will have to wait until the legislative process is completed.
Although the overall impact on revenue will depend on Parliament’s final decisions, the postponement could affect the timing of tax collections from the affected sectors.
Tax experts have long argued that predictability in tax policy is essential for business planning, particularly at the start of a financial year when companies are setting budgets, pricing products and making investment decisions. Frequent changes or delays in implementing tax measures can complicate compliance and financial planning.
The President’s decision also sparked a procedural debate in Parliament. Bbaale County MP Charles Tebandeke questioned whether the Bills should undergo fresh scrutiny because they were originally considered by the dissolved 11th Parliament.
He argued that the transition to the 12th Parliament required the Bills to be reintroduced and examined by newly constituted parliamentary committees.
Tayebwa dismissed the concern, saying the President had acted within the 30 days prescribed under Article 91 of the Constitution and directed that remarks alleging a constitutional breach be expunged from the Hansard.
The Bills will now be referred to the relevant parliamentary committees for reconsideration in light of the President’s recommendations before they are returned to the House.
The latest development illustrates the critical role presidential assent plays in Uganda’s legislative process.
While Parliament has the constitutional mandate to enact tax laws, the President’s power to return Bills for reconsideration provides an additional layer of policy scrutiny, particularly on measures with significant implications for investment, taxation and economic growth.
The coming days will determine whether Parliament amends the disputed provisions in line with the President’s recommendations or seeks to defend its original position, a decision that will shape both the government’s revenue strategy and the tax obligations facing businesses in the new financial year-URN. Give us feedback on this story through our email: kamwokyatimes@gmail.com
