Businesses Below the New VAT Registration Threshold Should Not Rush to Deregister

What the report says

Uganda has raised the mandatory VAT registration threshold for businesses dealing in taxable supplies from Shs150 million to Shs300 million in annual turnover, under amendments to the Value Added Tax law passed by Parliament on April 21, 2026 and assented to by the president on May 18, 2026. The changes took effect on July 1, 2026, according to Nile Post.

The reform was presented as a way to ease compliance burdens for smaller firms and reduce administrative costs for the Uganda Revenue Authority. Businesses below the new threshold are no longer required to register for VAT, though they may still choose voluntary registration if they meet the conditions.

The article cautions, however, that companies already registered should not automatically rush to deregister. It notes that deregistration can trigger tax obligations, including paying any outstanding output VAT on assets and stock, which may create an immediate liability.

It also highlights possible commercial effects. Firms that lose VAT registration may become less attractive to VAT-registered customers, who often prefer suppliers they can buy from while still claiming input VAT. The piece advises businesses to weigh tax, customer and competitiveness implications carefully and seek professional advice before deciding whether deregistration or voluntary registration is the better option.