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Tax Administration
Taxes in Uganda are centrally assessed and collected by the Uganda Revenue Authority (URA), headed by a Commissioner General.
Within the organisational structure of URA, two operational departments (Domestic Taxes and Customs) headed by Commissioners are directly responsible for the assessment and collection of revenues resulting from the tax laws below:
Income Tax
In Uganda, income tax applies generally to all types of persons who derive income, whether an individual, bodies of individuals, or corporate entities. Resident persons are taxed on worldwide income, while non-resident persons are taxed only on income derived from sources in Uganda.
Income tax is imposed on three broad categories of income – Business income, Employment income and Property income.
Most of the taxes imposed are self-assessed. The self-assessment system imposes on the taxpayer, in the first instance, responsibility for calculating taxable income and the tax due on that income. The taxpayer’s calculations may however be reviewed by revenue officials when returns are filed and may be subject to further audit.
Tax rates for Individuals in Business
The income tax rate for individuals depends on the income bracket in which the individual falls. Resident individuals enjoy a tax free annual income threshold of UGX. 2,820,000 per annum. The balance is taxed at 10%, 20% or 30% depending on the income bracket. Individuals who earn above UGX 120,000,000 pa pay an additional 10% on the income above 120m.
Tax rates for Individuals in Employment
Employers are required by law to deduct tax from an employee’s salary or else they become personally liable for the tax that should have been deducted. The monthly PAYE (Pay As You Earn)rates are shown below:
Tax rates for Companies
The income tax rate for a company i.e. a body of persons, corporate or unincorporated, created or recognised under any law in Uganda or elsewhere, is 30% of the entity’s CHARGEABLE INCOME i.e. gross income less tax allowable deductions.
For non-resident companies, an additional 15% tax may become chargeable on repatriated branch profits.
Tax rates for Small Businesses
Resident persons with a turnover of less than UGX 50m are taxable at Presumptive rates below:
Tax on Rental income derived by individuals
Tax on rental income derived by an individual is assessed separately from the individual’s other business incomes or employment income. The tax is 20% of the rental income amount after deducting –
Withholding tax on payments to Resident & Non-resident persons
The obligation to withhold tax lies with a withholding agent who is defined under the Act to mean any person required to withhold tax upon making any payment to a payee. A payee is any person who receives a payment from which tax is required to be withheld. The tax rates are subject to existing Double Taxation Agreements. Tax withheld may be final or creditable.
Income Tax reporting obligations
Value Added Tax (VAT)
VAT (also referred to as Goods and Services Tax in other jurisdictions) is a consumption tax charged at a rate of 18% on all supplies made by taxable persons i.e. persons registered or required to register for VAT purposes. The threshold for VAT registration is an annual turnover of UGX 50m or UGX 12.5m within 3 months of trading.
Some transactions are beyond the scope of VAT and these are classified as Exempt supplies. Supplies on which VAT is charged at 0% are classified as zero-rated supplies.
Accounting for VAT
VAT becomes due depending on the time of supply. Under the VAT Act, a supply of goods or services takes place when any of the following takes place first –
When any of the above takes place, the difference between VAT incurred by the person (input tax) and the VAT charged by the person (output tax) is paid to, or claimed as an offset or cash refund from the tax authority.
VAT reporting obligations
All taxable persons are required to file a return for every tax period (i.e. month)within 15 days after the end of the month.
Excise Duty: This is a tax that is imposed on specified imported or locally manufactured goods, and services. Essentially it is a tax on “luxury” items. The applicable rates may be specific or ad valorem.
The tax is imposed on the value of the import; and in the case of locally manufactured goods, the duty (local excise duty) is payable on the ex-factory price of the manufactured goods.
Exported locally manufactured goods are exempt from excise duty.
Persons supplying excisable goods and services are required to register and file monthly Returns to the tax authority by the 15th day of the month following the month in which delivery of the goods was made.
Stamp Duty: Stamp Duty is imposed by the Stamps Act. It is a duty payable on any instrument (document) which upon being created, transferred, limited, extended, extinguished or recorded, confers upon any person, a right or liability.
The affected instruments (currently about 66) are listed in the Schedules to the Stamps Act. The applicable rates are either fixed or ad valorem.
The most common instruments that attract stamp duty include – Affidavits
Agreements or Memorandums of Agreement Company Articles and Article of Association (0.5%) Caveats
Insurance policies Powers of Attorney Promissory Notes Mortgage Deeds (0.5%)
Debentures (0.5%)
Transfer of immovable property (1%)
Customs Duty: This is a tax levied on goods imported (import duty) or exported (export duty) from Uganda at specific or ad valorem rates. The East African Community Customs Management Act 2004 (EACCMA) is the legal framework for customs operations in Uganda and the region as a whole.
A customs union exists between the East African Community States of Uganda, Kenya, Tanzania, Rwanda and Burundi for the main purpose of promoting international trade between the partner states. The union operates as a single customs territory and trading bloc with a view to harness economic growth through a wider market for goods and services. In order to achieve this, the partner states have agreed to –
The main features of a Customs Union include the following:
Documents for importation of goods
The following import documents may be required for purposes of making a declaration to customs:
Valuation of imported Goods
Goods imported into the country from without the EAC must be valued for taxation purposes
i.e. a customs value must be determined. The customs value forms the basis for computation of customs duties which include import duty, Value Added Tax, Withholding tax, Excise duty and other duties e.g. environmental levy. Applicable tax rates are defined in the Customs External Tariff.
Goods are valued using the following methods adopted by GATT (General Agreement on Tariff and Trade) and applied chronologically –
Exemptions from Customs duties
Passengers’ Baggage and Personal Effects
In order to qualify for exemption, the following conditions should be met –
Duty Free Allowance for Passengers of majority age
The items listed below may be imported as duty free items –
Exemptions for specified categories of people and entities under the 5 th Schedule EACCMA
Goods imported by or on behalf of –
Other general exemptions include –
Items imported by bona fide persons changing residence/returning residents
Temporary Visit
The following goods imported as baggage by a person on a temporary visit not exceeding three months to a partner state may be exempted –
Rates of duty
Generally, the following rates will apply to an import of goods from outside the community: