By Wadulo Arnold Mark
To ensure business owners take full advantage of tax perks while staying legally compliant, the Uganda Free Zones and Export Promotions Authority (UFZEPA) partnered with the Uganda Revenue Authority (URA) to host a practical training workshop for Special Economic Zones (SEZs) and Free Zones operators in Uganda.
Organized twice a year, this sensitization meeting breaks down customs rules, tax incentives, and digital tax tools for free zone developers and operators. The core objective of the free zone scheme is clear: drive export-led industrialization, encourage local product processing, and create jobs for young Ugandans.
Operating within a free zone legally places a business outside the standard customs territory for tax purposes. This allows factories to import machinery, equipment, and raw materials duty-free.
Explaining the purpose of the training, Rebecca Nalumu Wamono, Senior Manager for Special Economic Zones Operations and Compliance at UFZEPA, highlighted why tax awareness is essential.
“We organized a sensitization meeting today for free zone developers and operators to sensitize them on first of all on their tax obligation and also custom requirements in order to promote value addition for export,” Wamono shared. “If the free zones know their tax obligations and also the incentives that they can benefit from, they’ll be able to comply with the tax requirements but they’ll be able to invest or reinvest and create employment but also more importantly export more.”
Wamono detailed that businesses in an Export Processing Zone (EPZ) must export at least 80% of their total annual production. If an EPZ factory sells the remaining 20% on the domestic market, it must pay standard import duties, Value Added Tax (VAT), and local taxes. Meanwhile, companies operating under a Free Port license are permitted to sell 100% of their goods locally, provided all required taxes are paid.
Crucially, UFZEPA is pushing for “backward linkages” so that free zone factories buy raw materials directly from local Ugandan suppliers instead of importing them. For instance, if a coffee exporter needs packaging bags, buying them from a local packaging company keeps money circulating within Uganda. Conceptually, when a local supplier sells goods to a free zone factory, that transaction is considered an export.
“Our plea as we do the tax amendments and tax transformation is that we support these free zones to source locally by zero-rating the value added tax,” Wamono emphasized. “So that all procured items that are sourced from our local companies enter the free zones with a VAT zero rated.”
Wamono added that to access these tax exemptions, a business must obtain an official developer or operator license from UFZEPA, and its operational site must be formally gazetted by law.
Tax paperwork can feel overwhelming, but URA is using smart technology to make compliance effortless. Seguya Hafsah Nabachwa, Supervisor for Tax Education at URA, guided participants through automated digital systems built to save businesses time and money.
Filing monthly VAT returns late triggers an automatic 200,000 Shilling penalty. However, Nabachwa revealed that URA now prefills monthly VAT returns automatically using data pulled from the Electronic Fiscal Receipting and Invoicing Solution (EFRIS) invoicing app and The Automated System for Customs Data (ASYCUDA) customs platform.
“When you file late the penalty is automatic, 200,000 shillings, so I don’t know why you should file late when we are now prefilling the returns for you,” Nabachwa pointed out. “Whoever you’ve been paying in between there to fill that monthly return, kindly save that money.”
Highlighting major tax relief, Nabachwa also announced that URA is waiving old unpaid tax debts originating from before June 30, 2016, that remained unpaid as of July 1, 2026. “If you have any tax outstanding as at 30th June 2016 and that same tax was still outstanding as at 1 July 2026 we are going to waive it because we feel we can no longer realize it. It’s not collectible.” Nabachwa confirmed.
Furthermore, URA revised penalties for non-usage of EFRIS receipts from heavy flat rates down to double the tax amount on an un-fiscalized transaction.
To maintain compliance, free zone businesses must run automated stock management systems so inspectors can verify raw materials, processed goods, and local sales. By combining UFZEPA’s drive for local supplier integration with URA’s digital prefilling tools, Uganda is creating a transparent, tech-driven business environment where industries can flourish and expand exports globally.
