resident Yoweri Museveni has declined to assent to two tax bills and returned them to Parliament for reconsideration.
The measures are the Income Tax (Amendment) Bill, 2026 and the Excise Duty (Amendment) Bill, 2026. His objections focus on a casino winnings exemption and a proposed excise duty increase on plastic granules.
In a letter read to the House by Deputy Speaker Thomas Tayebwa, Museveni warned that the contested provisions could encourage tax avoidance, reduce government revenue and hurt manufacturers.
The President invoked Article 91(3)(b) and (c) of the Constitution. He asked MPs to reconsider clause 11 of the income tax bill and clause 2(e) of the excise duty bill.
Casino winnings exemption raises tax avoidance concerns
Parliament had amended Section 131 of the Income Tax Act to impose withholding tax on betting and gaming winnings.
Under the amendment, the tax would apply to the difference between a player’s payout and the amount staked. Lawmakers later introduced an exemption for winnings from land-based casinos licensed under the Lotteries and Gaming Act.
Museveni said the exemption would weaken the tax system and create opportunities for businesses to avoid their obligations.
“The exemption creates opportunities for tax avoidance and revenue leakage. By removing an entire category of gaming winnings from withholding tax, the amendment creates incentives for transactions to be structured through land-based casinos in order to obtain a tax advantage not available to other gaming operators,” Museveni noted.
The President also argued that the provision would unfairly distinguish between land-based casinos and online gaming operators conducting substantially similar economic activities.
“There is no justification for exempting one category while taxing the other,” the President argued.
Museveni proposed applying withholding tax uniformly to all betting and gaming winnings. The taxable amount would remain the difference between the payout and the stake.
He recommended retaining only the existing exemption for winnings paid under the national lottery.
Plastic granules levy sent back for further study
Museveni also rejected Parliament’s proposed excise duty increase on plastic granules used to manufacture single-use plastic products.
The existing rate is 2.5% or $70, about Shs259,000, per tonne, whichever is higher. Parliament’s amendment raised it to 25% or $1,500, about Shs5.5 million, per tonne, whichever is higher.
The President warned that such a sharp increase could raise production costs and damage the manufacturing sector. Parliament’s official account also reported his concern about possible effects on production, investment and employment.
“The proposed increase is substantial and is likely to impose significant cost pressures on manufacturers engaged in the production and use of single-use plastics. It may adversely affect production, investment and employment within the sector,” Museveni warned.
He added that Uganda does not yet have readily available alternatives to plastic packaging.
“I, therefore, consider that the matter requires further study before the proposed increase is implemented as a policy measure for advancing environmental conservation objectives,” the President said.
Museveni recommended retaining the existing rate of 2.5% or $70 per tonne while Parliament conducts further study.
He also supported maintaining exemptions for specified plastic products used in food packaging, pharmaceutical packaging, sanitary pad manufacturing and other designated industrial activities.
After reading the President’s message, Tayebwa referred the disputed provisions to Parliament’s Finance Committee for urgent reconsideration.
He asked committee members to review the President’s recommendations and return a report to the House as soon as possible.
“We need money. Please meet and quickly bring the report on Thursday,” Tayebwa said.
MPs question procedure for returned bills
The President’s decision also triggered a procedural debate over legislation inherited from the dissolved 11th Parliament.
Charles Tebandeke, the MP for Bbale County, questioned whether the current Parliament should reconsider only the returned clauses.
He argued that the bills might need to undergo a fresh legislative process because the previous Parliament had already been dissolved.
Tebandeke also said parliamentary rules require the President to return a bill within 30 days. He claimed that the required period had passed.
Tayebwa rejected suggestions that Museveni had acted outside the constitutional timeline. He cautioned MPs against making factual allegations without supporting evidence.
“On issues of fact, whenever you’re going to raise them, be sure. I don’t want us to start accusing each other. So, can you tell us when the President received these Bills?” Tayebwa said.
The Deputy Speaker reminded MPs that the 30-day period starts when a cleaned and certified bill reaches the President. It does not begin immediately after Parliament passes the legislation.
Parliament’s official account similarly states that the constitutional period runs from the date a bill is formally presented to the President.
Tayebwa directed the Finance Committee to handle the review urgently and return its recommendations to the House.
