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Uganda

Country Name: Republic of Uganda
Currency: Ugandan Shilling (UGX)
Primary Tax Authority: Uganda Revenue Authority (URA)
Key Legislation:

  • Income Tax Act
  • Value Added Tax (VAT) Act
  • Tax Procedures Code
  • Investment Code
  • Customs Management Act

Fiscal Authority Allocation

Centralized Fiscal System:
Uganda operates a centralized tax system, with the Uganda Revenue Authority (URA) responsible for administering and collecting taxes, including corporate income tax (CIT), personal income tax (PIT), value-added tax (VAT), and customs duties.

Corporate Income Tax (CIT)

Standard Rate: 30%
Uganda imposes a corporate income tax rate of 30% on resident companies and non-resident companies with a permanent establishment in Uganda.

Corporate Forms and Taxation:

  1. Resident Companies: Taxed on worldwide income.
  2. Non-Resident Companies: Taxed only on Uganda-sourced income.

Exemptions and Incentives:

  • Investment Incentives: Uganda’s Investment Code provides tax holidays, reduced CIT rates, customs duty exemptions, and VAT relief for companies investing in sectors such as agriculture, infrastructure, mining, and manufacturing.
  • Special Economic Zones (SEZs): Companies operating in SEZs benefit from CIT exemptions, VAT exemptions, and customs duty reductions on imported capital goods and raw materials.

Goods and Services Tax (GST) / Value-Added Tax (VAT)

Standard Rate: 18%
Uganda imposes VAT at a standard rate of 18% on most goods and services. VAT applies to domestic production and imports.

Exemptions:
Certain goods and services, such as healthcare, education, and financial services, are VAT-exempt. Exports are zero-rated, allowing businesses to reclaim VAT paid on inputs used in producing export goods.

Personal Income Tax (PIT)

Progressive Rates:
Uganda applies a progressive personal income tax system to residents’ worldwide income and non-residents’ Uganda-sourced income.

Resident Tax Rates for 2023 (Annual Income):

  • Up to UGX 2,820,000: 0%
  • UGX 2,820,001 to UGX 4,020,000: 10%
  • UGX 4,020,001 to UGX 4,920,000: 20%
  • Above UGX 4,920,000: 30%

Non-Resident Tax Rate:
Non-residents are taxed at a flat rate of 10% on Uganda-sourced income.

Deductions and Allowances:
Taxpayers may deduct social security contributions, pension contributions, and certain personal allowances such as medical expenses and donations.

Additional Mandatory Contributions

Social Security Contributions:
Employers and employees must contribute to Uganda’s National Social Security Fund (NSSF), which covers pensions and other social benefits.

  • Employer Contribution: 10% of gross salary.
  • Employee Contribution: 5% of gross salary.

Withholding Taxes

  • Dividends: 15% for residents, 15% for non-residents
  • Interest: 15% for residents, 15% for non-residents
  • Royalties: 15% for residents, 15% for non-residents
    Uganda imposes withholding taxes on payments to non-residents, including dividends, interest, and royalties. Withholding tax rates may be reduced under Uganda’s double taxation agreements (DTAs).

Transfer Pricing Rules

Uganda follows the arm’s-length principle for transactions between related parties. Companies must ensure that cross-border transactions between related entities are conducted at market value. Transfer pricing documentation is required for companies engaging in significant related-party transactions.

Special Tax Regimes

  • Special Economic Zones (SEZs): Companies operating in Uganda’s SEZs benefit from CIT holidays, VAT exemptions, and customs duty relief for up to 10 years. These zones are designed to promote foreign direct investment (FDI) in export-oriented industries.
  • Investment Incentives: Uganda’s Investment Code offers tax holidays, reduced CIT rates, and customs duty exemptions to companies investing in key sectors such as agriculture, renewable energy, and infrastructure.

Other Taxes

  • Customs Duties: Uganda, as a member of the East African Community (EAC), applies customs duties based on the EAC Common External Tariff. Rates range from 0% to 25%, depending on the type of goods. Essential goods and raw materials may qualify for reduced or zero customs duties.
  • Excise Taxes: Excise taxes are levied on alcohol, tobacco, fuel, and luxury goods.
  • Property Tax: Local authorities impose property taxes on land and buildings based on their assessed value.

Double Taxation Agreements (DTAs)

Uganda has signed several double taxation agreements (DTAs) with countries such as the United Kingdom, South Africa, and the Netherlands. These agreements help reduce withholding taxes on cross-border income and prevent the double taxation of income earned in Uganda and other jurisdictions.

Local Taxes

Local governments in Uganda may impose property taxes, business license fees, and local service levies. However, most major taxes, including CIT, PIT, and VAT, are centrally administered by the Uganda Revenue Authority (URA).

Compliance and Reporting

Annual Filing:
Corporate tax returns must be filed within six months following the end of the financial year. Personal income tax returns are due by June 30th. VAT returns are filed monthly or quarterly, depending on the size of the business.

Penalties for Late Filing:
Penalties for non-compliance or late filing include fines and interest on unpaid taxes. The URA charges interest at 2% per month on overdue taxes, with additional penalties for tax evasion or underreporting of income.

Recent Developments

Oil and Gas Investment:
Uganda’s oil and gas sector is expected to be a significant driver of economic growth. The government is offering tax incentives to attract further investment in oil exploration and production, including CIT reductions, VAT exemptions, and customs duty reductions on imported equipment.

Renewable Energy Focus:
Uganda is encouraging investment in renewable energy projects, particularly in hydropower, solar, and wind energy. Companies investing in renewable energy infrastructure benefit from CIT holidays, VAT exemptions, and customs duty reductions.

Digital Taxation and E-Government:
Uganda has implemented digital tax systems to improve compliance and efficiency in tax administration. The government is also working to increase tax revenue from e-commerce and digital platforms.

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