President Yoweri Museveni has declined to assent to the Income Tax (Amendment) Bill, 2026 and the Excise Duty (Amendment) Bill, 2026, returning both to Parliament for reconsideration over concerns that some of the proposed tax measures could distort competition, encourage tax avoidance and negatively impact the economy.
The two Bills were passed by the 11th Parliament ahead of the 2026/27 National Budget and the start of the new financial year.
While presiding over Tuesday’s plenary sitting, Deputy Speaker Thomas Tayebwa informed Members of Parliament that the President had objected to specific clauses in both Bills, particularly the proposed withholding tax on betting winnings and the planned increase in excise duty on single-use plastics.
According to Tayebwa, the President opposed Clause 11 of the Income Tax (Amendment) Bill, 2026, which sought to introduce a withholding tax on winnings from betting and gaming activities while exempting winnings earned from land-based casinos licensed under the Lotteries and Gaming Act, 2016.
In his communication to Parliament, Museveni argued that exempting land-based casinos would create an uneven playing field among gaming operators and open avenues for tax avoidance.
“The exemption creates opportunities for tax avoidance and revenue leakage,” the President said.
He questioned why businesses engaged in similar economic activities should be subjected to different tax treatment, arguing that there was no justification for exempting one category while taxing another.
The President also rejected the proposed increase in excise duty on single-use plastics contained in the Excise Duty (Amendment) Bill, 2026.
Parliament had approved raising the tax from the current rate of 2.5 per cent or US$70 per tonne to 25 per cent or US$1,500 per tonne, whichever is higher, as part of efforts to reduce plastic pollution.
However, Museveni argued that the proposed increase was too steep and could have unintended consequences for the manufacturing sector.
“The proposed increase is substantial and is likely to impose significant cost pressures on manufacturers engaged in the production and use of single-use plastics,” he said.
He warned that higher production costs could affect investment, manufacturing output and employment, adding that Uganda’s manufacturing industry is not yet adequately prepared to transition to alternative packaging materials.
The President recommended that the proposal be subjected to further study before implementation.
The return of the Bills also sparked debate over the legislative process, with Bbale County MP Charles Tebandeke questioning whether the legislation should be reintroduced as fresh Bills since they had originally been passed by the dissolved 11th Parliament.
“The law assumes that the 11th Parliament that was handling these bills was dissolved and the matter was overtaken by events,” Tebandeke said.
Responding to concerns over the timing of the President’s decision, Deputy Speaker Tayebwa maintained that the Head of State had acted within the constitutional timeframe.
He reminded legislators that the Constitution requires the President to either assent to a Bill or return it to Parliament with recommendations within 30 days of receiving it.
The Bills will now be reconsidered by Parliament in line with the President’s recommendations before any further legislative action is taken.
