Accountancy in Uganda

>> Taxation in Uganda

Corporate income tax rates

The applicable rate for non-individuals including resident and non-resident companies is 30%. Chargeable income of a trust and retirement fund is taxed at a rate of 30%.

Tax rate applicable to mining companies

The rates applicable to a mining company range between 25% and 45%.

Capital gains

Uganda does not have capital gains tax, gains arising on the disposal of a non-depreciable business asset are included in gross chargeable income and treated as normal business income subject to income tax at the rate of 30%. The loss arising from such disposal is allowed as a deduction. In addition, with effect from July 2014, any non-resident individual who disposes of a commercial property that is in Uganda is subject to withholding tax of 10% of the proceeds from the sale and this becomes final tax on the non-resident person.

Income liable to tax

This is tax that is charged for each year of income upon the income of an individual whether resident or non-resident. Resident persons in Uganda are taxed on worldwide income i.e. income derived from both Uganda and all over the World; however, a non-resident person is taxed on only income sourced in Uganda. An exception to this rule applies to a short term resident who is a person available in Uganda for less than two years.

Residence

An individual is resident for tax purposes if;

  • He has a permanent home in Uganda is present in Uganda –

a) for a period or periods amounting in the aggregate to 183 days or more in that year of income; or

b) during the year of income and in each of the two preceding years of

c) income for periods averaging more than 122 days in each year of income; or

d) income for periods averaging more than 122 days in each year of income; or

e) is an employee or official of the Government of Uganda posted abroad during the year of income

  • An individual who is a resident individual for a year of income, but who was not a resident individual for the preceding year of income is treated as a resident individual in the current year of income only for the period commencing on the day on which the individual was first present in Uganda.
  • An individual who is a resident individual for the current year of income but who is not a resident individual for the following year of income is treated as a resident individual in the current year of income only for the period ending on the last day on which the individual was present in Uganda1.

A Company is resident for tax purposes if;

  • The company is incorporated or formed under a laws of Uganda; or
  • The management and control of the affairs of the body was exercised in Uganda in at any time in a particular year of income under consideration; or
  • The company undertakes the majority of its operations in Uganda during the year of income2.

1 Information about “residence of an individual” has been extracted from Section 9 of the Income Tax as amended in 2017.

2 Information about “residence of a company” has been extracted from Section 10 of the Income Tax as amended in 2017.

Income tax for small business

This is applicable to small businesses whose gross annual turnover is less than 150millions. It applies to both individuals and non-individuals like companies.

The amount of tax payable for purposes where gross turnover is more than 50 million is taxed as follows3:

Gross Turnover Tax
Where the gross turnover of the taxpayer exceeds Ushs.50 million but does not exceed Ushs. 75 million per annum Ushs. 937,500 or 1.5% of the gross turnover, whichever is lower
Where the gross turnover of the taxpayer exceeds Ushs.75 million but does not exceed Ushs. 100 million per annum Ushs. 1,312,500 or 1.5% of the gross turnover, whichever is lower
Where the gross turnover of the taxpayer exceeds Ushs.100 million but does not exceed Ushs.125 million per annum Ushs. 1,687,500 or 1.5% of the gross turnover, whichever is lower
Where the gross turnover of the taxpayer exceeds Ushs.125 million but does not exceed Ushs.150 million per annum Ushs. 2,062,500 or 1.5% of the gross turnover, whichever is lower

The amount of tax payable for purposes where gross turnover is less than Ushs. 50m is as follows based on the location and type of goods or services offered by the business. The taxes range as per location is as follows;

  • Kampala city and division of Kampala: Ushs. 100,000 to Ushs.550, 000
  • Municipalities: Ushs. 150,000 to Ushs. 450,000
  • own councils & Trading Centers : Ushs 100,000 to Ushs.350,000

3 This Tax summery table was extracted from the second schedule part 1 of the income tax as amended in 2007.

Income tax rates for individuals

Tax rate applicable to resident individuals4:

Chargeable Income per Annum Rate of Tax
0 – 2,820,000 Nil
2,820,000 – 4,020,000 10% of the amount by which chargeable income exceeds Ushs. 2,820,000(Ushs. 235,000 pm)
4,020,000 – 4,920,000 Ushs. 120,000 (Ushs. 10,000 pm) plus 20% of the amount by which chargeable income exceeds Ushs. 4,020,000 (Ushs. 335,000 pm)
Over 4,920,000 a) Ushs. 300,000 (Ushs. 25,000 pm) plus 30% of the amount by which chargeable income exceeds Ushs. 4,920,000(Ushs. 410,000 pm), and

b) Where the chargeable income of an individual exceeds Ushs. 120,000,000 (Ushs. 10,000,000 pm) an additional 10% charged on the amount by which chargeable income exceeds Ushs. 120,000,000 (Ushs. 10,000,000 pm)

Tax rate applicable to non-resident individuals5:

Chargeable Income per Annum Rate of Tax
0 – 4,020,000 10%
4,020,000– 4,920,000 Ushs 402,000 plus 20% of the amount by which chargeable income exceeds Ushs. 335,000
Over 4,920,000 a) Ushs. 582,000 plus 30% of the amount by which chargeable income exceeds Ushs. 410,000, and

b) Where the chargeable income of an individual exceeds Ushs. 120,000,000 an additional 10% charged on the amount by which chargeable income exceeds Ushs. 120,000,000

4 This Tax summery table for resident individuals was extracted from the Third schedule part 1 (1) of the income tax as amended in 2007.

5 Extracted from the Third schedule part 1(2) of the income tax as amended in 2007.

Returns and payment of income tax

All companies are now required to submit self-assessments returns online using the eTax system. Individuals whose only source of income is employment from one employer, whose income has been withheld at source by the withholding agent, are not required to file return.

Income tax returns are due after 6 months from the person’s end of accounting period and failure to comply with this attracts a penalty of UGX 200,000 per month for the time the return is late or 2% percent simple interest of the tax payable for that year per month, whichever is greater. The due date for payment is the same for returns of income. Interest on late payment is 2% per month (Simple interest)

Both companies and individuals are required to submit provisional estimates of income (indicating estimated tax payable) within the first six months for companies and four months for individuals from the beginning of their accounting period. The estimated tax is payable in two equal instalments for companies and 4 equal instalments for Individuals, the due date for payment is follows as follows: –

For companies

  • 1st Instalment: on or before the last day of the sixth month from the beginning of the accounting period
  • 2nd Instalment: on or before the last day of the twelfth month from the beginning of the accounting period

For individuals

  • This is paid in four equal instalments on or before the last day of the third, sixth, ninth and twelfth month of the year of income.6
  • Offset is permitted for withholding tax and advance tax suffered in the year.

6 Extracted from section 111(4) of the Income Tax Act as amended 2017.

Value-added tax

Other than exempt good and services, Value Added Tax (VAT) is charged on the following;

  • Ever taxable supply made by a taxable person7
  • Every import of goods other than an exempt import
  • Supply of imported services, other than an exempt service ,by any person.

7 Extracted from Section 4 (a), (b), (c) of the Value Added Tax Act.

The applicable rates are:

Zero Rate 0%
Standard rate 18%
VAT as a fraction of the inclusive price (standard rate) 9/59
Annual turnover threshold for registration 150,000,000

Customs duty

All exports from Uganda to other countries attract no tax; Goods imported into Uganda from Tanzania and Kenya are also not subject to import duty. Goods will only enjoy this preferential tariff treatment if they meet the EAC Customs Union Rules of Origin. The customs value is essential to determine the duty to be paid on imported goods. There are different import duty rates which apply to different items, the lowest being 0%, others include 10%, 25% and 30%. For motor vehicles, the tax body does not use the invoice value to calculate the Customs value; but uses the Motor Vehicle Indicative Values (i.e. a list of predetermined customs values for all motor vehicles) and uses the invoice value of goods to determine customs value except where there is no invoice or the tax body suspects an under-declaration of the invoice value, then it will use other methods to determine the customs value.

Excise duty

Uganda has both a specific and ad valorem excise regime.

Excise duty on imported goods is payable prior to clearance through Customs. However, not all imported items attract excise duty; there are specific items like Alcohols, wines and spirits, Jewellery, cement, air time, cigarettes, bank transaction fees and all soft drinks

In addition, petrol and kerosene, the following excise duty amendments were proposed:

  • 10% excise duty was introduced on mobile money withdrawal fees
  • 10% excise duty has been introduced on bank charges and money transfer fees

Excise duty on sugar was increased from 25 shillings to 50 shillings

Excise duty is quoted in both Uganda shillings (UGX), US dollars (USD) and percentage (%) with the following ranges;

  • For those quoted in USD ranges from USD 0.09
  • Those quoted in Uganda shillings range from UGX.200 to UGX 80,000
  • Those quoted in percentages range from 0% to 200%

Specific duty

A composite sum is determined and charged for a quantitative description of goods e.g. $1 per kilogram. The custom value of the goods does not need to be determined, as the duty is not based on the value of the goods

Ad-valorem duty

Duties are levied according to the value of goods and are usually expressed as percentages of the value in order to arrive at the amount payable on an imported item. The rules are based on the customs valuation agreement.

Stamp duty

Stamp duty is a duty paid to legalise documents in Uganda, any document without a stamp duty is not acceptable in courts of law, and instruments are as listed below. Stamp duty is payable on specified instruments is either Ad valorem (at a percentage) or fixed. This duty is most executed on various instruments by banks/ financial institutions, insurance companies, Registrar General’s Office, Registrar of Titles, Commissioners of Oaths, Administrator General, Hire Purchase Companies and Bonded Ware Houses.

Stamp duty is also administered by Uganda’s tax body and its self-assessment which will be through the issuance of an e-Stamp from the tax body effective 1st September 2012.

Common instruments with fixed stamp duty rate:

No. Instrument Current Rate
01 Affidavit including an affirmation or declaration 10,000
02 Agreement or Memorandum of an agreement 10,000
03 Articles of Association of a Company 10,000
04 Cancellation of instrument 10,000
05 Capital duty 0.5%
06 Caveat (Under the Registration of Titles Act) 10,000
07 Memorandum of Association of a Company 10,000
08 Partnerships 10,000
09 Policy of insurance 35,000
10 Power of Attorney 10,000
11 Promissory Note 10,000
12 Release of Instrument 10,000
13 Solemn or Statutory declaration 10,000

Common instruments attracting an Ad valorem rate:

No. Instrument Current Rate
01 Debenture 0.5% of total value
02 Equitable Mortgage 0.5% of total value
03 Gift 1% of total value
04 Hire purchase Agreement 1% of total value
05 Lease 1% of total value
06 Mortgage Deed 0.5% of total value
07 Security Bond or Mortgage Deed 1% of total value
08 Transfer 1.5% of total value

 

Tax treaties

Double tax treaties (DTA)

Uganda has DTAs with a number of countries that include; South Africa, United Kingdom, Mauritius, Zambia, Italy, Norway, Denmark, India, Netherlands, UAE, Seychelles, EAC, and Egypt with tax rates ranging from 0%(exempt) to 15% on Dividends, Royalties, Interest and Management & Professional fees.


Latest version updated 11th April 2019

Country Breakdown

44.27

Million

Population

USh

Ugandan shilling

Currency

$ 25.89

Billion

GDP

241,037

km2