The government has introduced a tax holiday for developers of hotels and ultra-luxury tourism facilities in a move aimed at attracting more investment into Uganda’s tourism sector.
Minister of Finance, Planning and Economic Development Henry Musasizi announced the measure on Thursday while presenting the National Budget for the 2026/27 financial year at Kololo Ceremonial Grounds.
Under the new incentive, foreign investors must invest at least $10 million, about Shs37.7 billion, to qualify. Ugandan investors must commit at least $5 million, about Shs18.8 billion.
“Introduction of a tax holiday for developers of hotels and other ultra-luxury tourism facilities investing at least USD 10 million for foreign investors, and $5 million for Ugandan investors,” Mr Musasizi said.
He said Parliament had approved the measure as part of the new tax proposals.
Government targets high-end tourism investment
Mr Musasizi said Foreign Direct Investment remained strong at $3.2 billion in the 12 months ending March 2026.
He said this reflected growing investor confidence in Uganda’s economy.
The minister also noted rising investor interest in Uganda’s small and medium enterprises.
“Kampala-based start-ups attracted about USD 30 million in 2025, up from USD 4 million the previous year, signaling growing confidence in the country’s innovation ecosystem and emergence as a destination for entrepreneurship, technology, and investment,” he said.
Tourism receipts recover after pandemic
The announcement comes as the government continues to report recovery in the tourism sector after the COVID-19 pandemic.
Mr Musasizi said tourism receipts rose to $1.86 billion in 2025. This was higher than the $1.4 billion recorded in 2018/19 before the pandemic.
The sector had dropped to $562 million in 2020, when global travel restrictions disrupted tourism.
“This remarkable recovery from the lowest receipts of $562 million recorded in 2020 demonstrates growing international confidence in Uganda as a destination for business, investment, and leisure,” he said.
The minister said tourism remains one of Uganda’s key export sectors. He said it generates foreign exchange, creates jobs and supports thousands of businesses across the country.
Tourism sector gets Shs567.32b
The government has allocated Shs567.32 billion to the tourism sector in the 2026/27 financial year.
The funds will support branding and marketing of Uganda as a tourism and investment destination. They will also support tourism infrastructure and improved hospitality standards.
“Priority interventions also include construction of highway sanitation facilities and tourism site refreshment centres, hospitality training, conservation, and wildlife protection to increase the wildlife population across the National Parks,” Mr Musasizi said.
He added that the government will promote health tourism and strengthen economic and commercial diplomacy through Uganda’s missions abroad.
The new allocation is higher than the Shs430 billion earmarked for direct tourism investment in the 2025/26 financial year.
Infrastructure projects continue
Mr Musasizi said the government continues to invest in tourism infrastructure across the country.
He cited development works at the Rwenzori Central Circuit Trail, Kitagata Hot Springs, the Source of the Nile in Jinja, and cultural heritage sites in Moroto and Dokolo.
“The construction of Kidepo International Airport is also underway to boost tourism in the Karamoja region and investments are aimed at improving visitor experience and strengthening Uganda’s competitiveness as a tourism destination. Twelve regional aerodromes have been maintained to support regional connectivity for tourism and trade,” Mr Musasizi added.
Uganda steps up destination marketing
Mr Musasizi said Uganda had registered several achievements in tourism marketing during the financial year.
He said the “Explore Uganda, the Pearl of Africa” brand had improved the country’s global visibility.
“Uganda’s global tourism visibility is at an all-time high under the “Explore Uganda, the Pearl of Africa” brand, driven by intensified international marketing and participation in major tourism exhibitions across Europe, Asia, Africa and North America,” Mr Musasizi said.
He added that the government used global platforms to promote Destination Uganda.
“Government leveraged global platforms such as the Africa Cup of Nations (AFCON) 2025 in Morocco and the World Travel Market in London to promote Destination Uganda and attract visitors. We also secured bids to host international conferences, strengthening its position in the Meetings, Incentives, Conferences and Exhibitions (MICE) sector,” he said.
Missions abroad to support tourism push
Mr Musasizi said the Economic and Commercial Diplomacy strategy had already delivered improved performance.
He cited increased tourist arrivals, higher foreign direct investment inflows and stronger export earnings.
“Government will continue to leverage its Missions Abroad to market Uganda as a preferred tourism, conference and investment destination, expand market access for Ugandan products, attract strategic investors, and mobilise the diaspora to support national development,” he said.
The minister said the budget seeks to accelerate the Tenfold Growth Strategy.
He said the government had allocated 95.6 percent of discretionary resources to ATMS and key enablers. These include agro-industrialisation, tourism development, mineral-based industrialisation, and science, technology and innovation.
