Uganda unveils three-year tax holiday for tourism

Uganda is offering a three-year income tax holiday to qualifying tourism start-ups to attract more private investment into one of the country’s fastest-growing economic sectors.

Industry experts say the incentive could encourage entrepreneurs to invest in tourism businesses that have long struggled with high operating costs, limited financing and other barriers to growth.

The tax incentive was announced at the recent UG Catalyst Summit 2026 held at MoTIV Bugolobi in Kampala. While Uganda has spent years promoting its wildlife, culture and natural attractions to international visitors, the latest policy signals a broader shift in strategy.

The government now wants tourism to become not only a destination for visitors but also an attractive destination for investors.

A tax holiday allows eligible new businesses to operate for a specified period without paying income tax. The idea is to reduce the financial pressure businesses often face during their early years, giving them more room to invest, expand and create jobs.

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

They believe the measure could encourage investment in hotels, tour companies, cultural tourism, community-based tourism projects and other businesses that make up Uganda’s tourism value chain. Many of these businesses are small and medium-sized enterprises, which are often the most affected by taxes, limited access to credit and costly regulations.

The optimism comes as tourism continues to play an increasingly important role in Uganda’s economy.

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

GDP measures the total value of goods and services produced in a country and is one of the main indicators used to assess economic performance. UBOS says these figures represent tourism’s direct contribution to Uganda’s economy through its Tourism Satellite Account, an internationally recognised system for measuring the sector’s economic impact.

For many entrepreneurs attending the summit, the tax holiday represents more than a financial incentive. They see it as evidence that the government is beginning to treat tourism as a serious investment sector rather than focusing mainly on attracting visitors.

The announcement also comes as Uganda expands its international tourism marketing campaigns. One recent initiative involved branded promotional buses operating in Paris to showcase Uganda’s tourist attractions to European audiences.

However, participants at the summit said international advertising alone will not be enough. They argued that attracting visitors must go hand in hand with reforms that make it easier for businesses to invest, grow and compete.

National Planning Authority chairperson Prof. Pamela Mbabazi said Uganda’s long-term economic transformation will depend on turning policy commitments into practical results.

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

Despite the positive response to the tax incentive, business leaders cautioned that several challenges continue to limit investment in tourism.

Many small tourism operators still struggle to obtain affordable loans because they are not fully integrated into the formal financial system. Others lack the business structures or financial records required by banks and investors, making it difficult for them to expand even as demand for Uganda’s cultural and nature-based tourism continues to grow.

Government says additional reforms are intended to address some of these obstacles. These include the introduction of an Opportunity Dashboard, designed to help investors identify business opportunities, and a planned Start-up Development Policy, which aims to strengthen support for new enterprises.

Participants also highlighted the opportunities presented by the African Continental Free Trade Area, which seeks to create a larger market for African businesses. However, they warned that many tourism micro, small and medium-sized enterprises remain ill-equipped to take advantage of those opportunities because they are still operating informally.

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

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