Uganda Announces Three-Year Tax Holiday to Support Tourism Recovery

Updated by Faith Barbara N Ruhinda at 1410 EAT on Thursday 2 July 2026

Uganda has introduced a three-year income tax holiday for qualifying tourism start-ups as part of efforts to attract greater private investment into one of the country’s fastest-growing economic sectors.

Industry experts say the incentive could help encourage entrepreneurs to invest in tourism ventures that have long faced challenges including high operating costs, limited access to financing, and other structural barriers to growth.

The announcement was made at the UG Catalyst Summit 2026, held at MoTIV Bugolobi in Kampala. While Uganda has for years promoted its wildlife, culture, and natural attractions to international visitors, the new policy signals a broader strategic shift aimed at strengthening the sector’s investment appeal.

Under the measure, eligible new businesses will be allowed to operate for up to three years without paying income tax. The initiative is intended to ease early-stage financial pressure, giving start-ups more room to reinvest profits, expand operations, and create jobs.

Tourism stakeholders have welcomed the move, describing it as one of the strongest policy signals yet that government is working to reduce the cost of doing business in the sector.

They say the incentive could spur investment in hotels, tour companies, cultural tourism ventures, community-based tourism projects, and other enterprises within Uganda’s tourism value chain. Many of these businesses are small and medium-sized enterprises, which often face the greatest burden from taxation, limited credit access, and regulatory costs.

According to figures from the Uganda Bureau of Statistics (UBOS), tourism contributed Shs 6,061 billion to Uganda’s Gross Domestic Product (GDP) in 2024, representing a 34.6 per cent increase compared to the previous period.

GDP refers to the total value of goods and services produced within a country and is a key measure of economic performance. UBOS attributes the tourism figures to the sector’s direct contribution to the economy, captured through its Tourism Satellite Account, an internationally recognised framework for measuring tourism’s economic impact.

For many entrepreneurs attending the UG Catalyst Summit 2026, the newly announced tax holiday is seen as more than a financial incentive. They say it signals a shift in government thinking, with tourism increasingly being treated as a strategic investment sector rather than only a tool for attracting international visitors.

The policy announcement comes as Uganda continues to expand its global tourism promotion efforts. One recent initiative saw branded promotional buses deployed in Paris to market the country’s attractions to European audiences.

However, stakeholders at the summit cautioned that international marketing alone is not sufficient to drive growth. They argued that efforts to attract tourists must be matched with reforms that make it easier for businesses to invest, operate, and scale.

National Planning Authority chairperson Prof. Pamela Mbabazi said Uganda’s long-term transformation agenda will depend on translating policy commitments into practical outcomes.

“Every generation receives a defining assignment. Our generation has been assigned the responsibility of economic transformation,” she said.

Despite optimism surrounding the tax incentive, business leaders highlighted persistent structural challenges in the sector. Many small tourism operators continue to struggle with access to affordable credit due to limited integration into the formal financial system. Others lack the required business structures and financial documentation, making it difficult to secure financing or expand operations even as demand for Uganda’s cultural and nature-based tourism grows.

The government says additional reforms are underway to address some of these constraints. These include the introduction of an Opportunity Dashboard aimed at helping investors identify viable business prospects, as well as a planned Start-up Development Policy designed to strengthen support for emerging enterprises.

Participants also pointed to opportunities under the African Continental Free Trade Area (AfCFTA), which aims to create a larger integrated market for African businesses. However, they noted that many tourism micro, small, and medium-sized enterprises remain unprepared to fully benefit due to continued informality and limited capacity.

Looking ahead, stakeholders said Uganda’s ambition to grow its economy tenfold under the Fourth National Development Plan (NDP IV) will depend in part on whether tourism enterprises can transition from small, informal operations into competitive, investment-ready businesses capable of generating jobs and sustaining long-term economic growth.

-Observer

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