[Uganda] Low earners will benefit from PAYE threshold rise

In Uganda, a public policy commentator and member of parliament has stated that Uganda’s proposed income tax reforms emphasise fairness but warned of the potential economic impact of high taxes, Nile Post reports.

Speaking on Next Radio, Rukiga County Member of Parliament-elect Patrick Kiconco Katabaazi shared insights into the government’s strategy to raise revenue for the 2026/27 financial year.

The reforms are reportedly part of the proposed Income Tax Amendment Measures. They include a controversial proposal to increase PAYE tax from 30 per cent to 40 per cent for individuals earning above Shs 10 million monthly. 

The proposal has raised concerns in the nation, but Mr Kataabazi said it would only affect a small proportion of taxpayers.

“The majority of PAYE taxpayers earn Shs 1,000,000 or less. The revision from 30 to 40 per cent targets high-income earners and will not impact most Ugandans,” he said.

The minister highlighted the principle of fairness that underpins global tax systems.

He reportedly noted that Ugandans earning less than Shs 355,000 per month will be exempt from paying income tax. That increase, from the current threshold of Shs 235,000, will bring some relief to low-income earners. 

Those earning above Shs 10 million per month will face the increased rate of 40 per cent. The change is intended to raise government revenue while maintaining fairness in the system.

Mr Kataabazi did caution that high taxes could discourage business activity and hinder economic formalisation.

“High taxes can drive people out of business. For goods with elastic demand, price increases caused by taxation reduce consumption. Over-taxing can limit efforts to expand the tax base, as some prefer to remain informal,” he said.

Source: Nile Post

(Quotes via original reporting)

In Uganda, a public policy commentator and member of parliament has stated that Uganda’s proposed income tax reforms emphasise fairness but warned of the potential economic impact of high taxes, Nile Post reports.

Speaking on Next Radio, Rukiga County Member of Parliament-elect Patrick Kiconco Katabaazi shared insights into the government’s strategy to raise revenue for the 2026/27 financial year.

The reforms are reportedly part of the proposed Income Tax Amendment Measures. They include a controversial proposal to increase PAYE tax from 30 per cent to 40 per cent for individuals earning above Shs 10 million monthly. 

The proposal has raised concerns in the nation, but Mr Kataabazi said it would only affect a small proportion of taxpayers.

“The majority of PAYE taxpayers earn Shs 1,000,000 or less. The revision from 30 to 40 per cent targets high-income earners and will not impact most Ugandans,” he said.

The minister highlighted the principle of fairness that underpins global tax systems.

He reportedly noted that Ugandans earning less than Shs 355,000 per month will be exempt from paying income tax. That increase, from the current threshold of Shs 235,000, will bring some relief to low-income earners. 

Those earning above Shs 10 million per month will face the increased rate of 40 per cent. The change is intended to raise government revenue while maintaining fairness in the system.

Mr Kataabazi did caution that high taxes could discourage business activity and hinder economic formalisation.

“High taxes can drive people out of business. For goods with elastic demand, price increases caused by taxation reduce consumption. Over-taxing can limit efforts to expand the tax base, as some prefer to remain informal,” he said.

Source: Nile Post

(Quotes via original reporting)