The government has introduced a tax holiday for developers of hotels and other ultra-luxury tourism facilities as part of new measures aimed at boosting investment in the tourism sector.
Presenting the National Budget for the 2026/27 financial year at Kololo Ceremonial Grounds on Thursday, the Minister of Finance, Planning and Economic Development, Mr Henry Musasizi, said the incentive will target investors developing high-end tourism facilities in Uganda.
Under the new measure, foreign investors will qualify for the tax holiday if they invest at least $10 million (approximately Shs37.7b), while Ugandan investors must invest a minimum of $5million (approximately Shs18.8b).
‘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,’ the Minister said while outlining tax measures approved by Parliament.
Mr Musasizi noted that Foreign Direct Investment remained strong at USD3.2 billion in the twelve months ending March 2026, which reflects growing investor confidence in Uganda’s economy.
He emphasized that investors are increasingly showing interest in Uganda’s small and medium enterprises, adding that, ‘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.’
The announcement comes as the government continues to highlight the recovery of the tourism sector following the COVID-19 pandemic.
Mr Musasizi noted that tourism receipts increased to USD1.86 billion in 2025, up from USD1.4 billion recorded in 2018/19 before the pandemic. The sector had fallen to a low of $562 million in 2020 at the height of the COVID-19 disruptions, during global travel restrictions.
‘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 Finance Minister noted that tourism remains one of Uganda’s most important export sectors, generating foreign exchange, creating jobs, and supporting thousands of enterprises across the country.
The government has allocated Shs567.32 billion to the tourism sector in the next financial year, with priority areas including branding and marketing of Uganda as a tourism and investment destination, tourism infrastructure development, and improvement of 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.
Other planned interventions include promotion of health tourism and strengthening economic and commercial diplomacy through Uganda’s missions abroad.
This is up from Shs430b that was earmarked for direct investment for the tourism sector in the 2025/26 financial year.
The minister also noted ongoing investments in tourism infrastructure, including 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.
Marketing push
Mr Musasizi said many achievements have been registered in the tourism sector during the financial year, particularly in marketing Destination Uganda.
‘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.
Adding, ‘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 further noted that under the Economic and Commercial Diplomacy (ECD) strategy, Uganda is already seeing improved performance, including increased tourist arrivals, foreign direct investment inflows and 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.
Mr Musasizi noted that the Budget aims to accelerate the attainment of the Tenfold Growth Strategy, where government has allocated 95.6 percent of discretionary resources to the ATMS; Agro-industrialisation, Tourism Development, Mineral-Based Industrialisation, and Science, Technology and Innovation, and their key enablers.