Uganda taxes its smallest businesses differently from everyone else. Instead of working out profit, a small business pays income tax as a fixed amount or a small percentage of its sales. The regime is called presumptive tax, and it has a feature that many owners never use: the rate is lower if you keep records. With the final return for the 2025/26 year due on 31 December 2026, this is a good quarter to understand the bands and to decide which side of the table you want to be on.
Who is a small business for tax purposes
A URA technical note on its presumptive tax data describes the small business income tax as applying to businesses, whether individuals, sole proprietors or companies, with turnover of UGX 150 million or less, and notes that the regime excludes professionals. The tax is calculated from estimated sales rather than profit, because, as the note puts it, small businesses often do not keep comprehensive sales records. URA's own summary of a study of the regime describes presumptive tax as a final tax on business income, introduced in Uganda in 1997 and last reformed in July 2020 to make the system more progressive, simpler and fairer to small firms.
Note that the VAT registration threshold moved to UGX 300 million from 1 July 2026, but the presumptive band described in URA's materials still tops out at UGX 150 million. A business between those two figures is outside presumptive tax and outside compulsory VAT, and files an ordinary income tax return.
The two columns
The URA technical note sets out the rates in force since the July 2020 reform. Annual turnover below UGX 10 million attracts no tax. Above that, the amount depends on whether the business keeps records:
| Annual turnover (UGX million) | Without records | With records |
|---|---|---|
| 10 to 30 | 80,000 | 0.4% of turnover above 10 million |
| 30 to 50 | 200,000 | 80,000 plus 0.5% of turnover above 30 million |
| 50 to 80 | 400,000 | 180,000 plus 0.6% of turnover above 50 million |
| 80 to 150 | 900,000 | 360,000 plus 0.7% of turnover above 80 million |
The note observes that the post-2020 rates are lower than before, at less than 1% of sales, and the detailed schedule and any amendments sit in the Income Tax Act. Check the current Act or the URA portal before you file; the table here is the regime as URA's note describes it.
What the difference is worth
Take a shop with annual turnover of UGX 40 million. Without records the tax is UGX 200,000. With records it is 80,000 plus 0.5% of the 10 million above 30 million, which is 80,000 plus 50,000, or UGX 130,000. At UGX 100 million turnover the gap widens: UGX 900,000 without records against 360,000 plus 0.7% of 20 million, which is UGX 500,000, with them.
The saving is real but it is not the main point. Records are what let you know your turnover in the first place, rather than having URA estimate it for you, and they are what you will need the day you cross into the ordinary regime.
What counts as records
The regime rewards the business that can show its sales. In practice that means a till record or sales book for every day, purchase invoices and receipts from suppliers, and bank and mobile money statements that reconcile to the sales. If your sector is one of the twelve gazetted for EFRIS, your e-receipts already form a daily record that URA can see.
The return and its date
URA's domestic taxes FAQs explain that provisional income tax is paid by persons subject to income tax except taxpayers under the presumptive regime, so a small business files once a year. Every taxpayer must file a final return not later than six months after the end of the year of income, and URA's published table for a business using the normal July to June year gives 31 December 2026 as the final return date for the 2025/26 year.
What to do this quarter
- Add up your sales for 1 July 2025 to 30 June 2026 and find your band.
- Decide whether you can substantiate the with-records rate, and if not, start keeping a daily record from today so that next year you can.
- File the presumptive return on the URA portal and pay by 31 December 2026.
- If your turnover is heading towards UGX 150 million, start preparing proper accounts now, because the ordinary regime taxes profit and will want them.
Presumptive tax was designed for businesses that cannot keep books. A business that can, and does, pays less for the privilege.
Sources
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