Uganda Government Seeks Tax Waiver Extension for Bujagali Hydro Power

Uganda Government Seeks Tax Waiver Extension for Bujagali Hydro Power

The Ugandan government has presented the Income Tax (Amendment) Bill, 2025 to Parliament, proposing an extension of the tax exemption for the Bujagali Hydro Power Project until June 30, 2025.

State Minister for Finance (General Duties), Hon. Henry Musasizi, introduced the bill on Tuesday, February 4, 2025, seeking to amend Section 21 of the Income Tax Act to grant Bujagali an additional one-year tax relief.

Musasizi urged lawmakers to expedite the bill’s approval, emphasizing the need for swift legislative action within two weeks.

Between 2018 and 2021, the Ugandan government granted similar tax exemptions to Bujagali. However, in 2023, Parliament rejected a government proposal seeking a five-year tax waiver for the power company.

During the same parliamentary session, presided over by Deputy Speaker Thomas Tayebwa, the government also tabled the Excise Duty (Amendment) Bill, 2025.

This bill proposes a levy of UGX 1,500 per liter on un-denatured spirits with an alcohol content of 80% or more, derived from locally sourced raw materials.

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Additionally, it seeks to impose a UGX 1,700 per liter tax on domestically produced spirits with an alcohol volume of less than 80%.

Un-denatured alcohol refers to ethanol that has not been mixed with other substances to make it unfit for human consumption.

It remains a widely used chemical in scientific research, healthcare, and manufacturing industries.

The extension of Bujagali’s tax waiver has sparked debate, with some policymakers questioning the long-term fiscal impact of continued exemptions.

While the government argues that the relief supports electricity affordability and infrastructure development, critics stress the need for sustainable tax policies that do not compromise national revenue.

As Parliament deliberates on the bill, stakeholders will closely watch whether the proposed tax measures align with Uganda’s broader economic and fiscal strategies.

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