Tax laws

This article might interest you, if you are either unsure if or when to pay taxes and how the procedure works.

Who has to pay taxes?

What obligations do companies have?

And what about my employees?

Legal form copy: Welcome

Who has to pay taxes?

The income tax rate applicable to the chargeable income of companies whose revenue exceeds UGX 150 million (36.000€).[1]
Value Added Tax (VAT) registration applies to persons whose turnover exceeds UGX 150,000,000 in a year or turnover in 3 months exceeds Shs 37,500,000 (9.000€).[2]

[1] https://taxsummaries.pwc.com/uganda/corporate/taxes-on-corporate-income

[2] https://observer.ug/businessnews/58372-when-are-startups-required-to-pay-taxes)

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What obligations do companies have?

Submission of provisional tax estimates (vorläufige Steuerschätzung)

Companies are required to submit provisional tax estimates within the first six months from the beginning of their accounting period.

Submission of the returns (Steuererklärung)

Companies are required to submit their returns by the end of sixth month from the end of the accounting period to which the return relates.
Note: All companies are now required to submit self- assessment returns. This means that they are required to assess themselves and their assessment will be deemed to be the assessment by the Commissioner General.

Record keeping

Companies, just like all the other taxpayers, are required to keep records pertaining to their business transactions for five years after the end of the year of income to which the record or evidence relates.[3]

[3] https://www.ura.go.ug/Resources/webuploads/INLB/TAXATION%20HANDBOOK%20.pdf

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My revenue exceeds UGX 150,000,000 per year. What now?

(Full text available: https://www.africa-uganda-business-travel-guide.com/Uganda_business.html)

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Reserve your company name at the Registrar's office. Duration 2 days and Cost UGX 25,000

To reserve a company name, the Investor files a company name request at the Office of the Registrar. A clerk conducts an automated search and forwards the application to a staff lawyer.

The Registrar reviews the application and, if the application is approved, returns it with the assessment, which the Investor takes to the bank. Upon paying the fee, the founder receives a receipt that is used to complete the name reservation.

Follow this link: https://ursb.go.ug/business-name-registration/

Pay registration fees at the bank. Duration 1 day.

You need to make all non-tax payments to government agencies at a bank.

Follow this link: https://ursb.go.ug/registrations/

Obtain the necessary incorporation and tax registration forms from the Uganda Bookshop. Duration 1 day and Cost UGX 5600.

The fees for each of the required incorporation forms are as follows:

Statement of nominal capital: UGX 500.
Declaration of compliance with the requirements of the Companies Act (Form A2): UGX 500.
Particulars of directors and secretaries: UGX 700.
Consent to act as director of company: UGX 500.
Notice of situation of the registered office and the registered post address: UGX 500.

Sign the declaration of compliance before the commissioner of oaths. Duration 1 day and cost UGX 10,000

Your Declaration of compliance with the requirements of the Companies Act (FORM A2), must be commissioned (signed and sealed) before a commissioner for oaths, who is an advocate. The other documents can be witnessed by any other reputable person because they are not an oath.

Obtain requisition for bank pay-in-slip and Bank payment Advice forms from the Uganda Registration Services Bureau. Duration 1 day and Cost UGX 0 (Zero)

Computerized processes reduced the time frame for paying government levies, such as fees for licenses and certificates. The process requires only 30 minutes, down from 4 working days.

Pay registration fees at a given bank. Duration 1 day and Cost UGX 2500 Bank Charges

Registration receipts are obtained from the bank where the fees were paid (within 30–40 minutes). Previously, the Investor would pay the fee at the bank and then wait for 3 days to pick up the receipts from the Ministry of Justice.

File with the registrar general, Duration 1 day.

Fee schedule for company registration:

Registration fees: UGX 100,000
Stamp duty: 0.5 % of shared capital.
Stamp duty on Articles of Association: UGX 35,000 ( flat fee).

Registration fees depend on the amount of share capital. They increase as the share capital increases. For instance, the fee for share capital UGX 5 million is UGX 160,000, and for share capital 10 million, UGX 186,000. Registration fees for a company whose share capital does not exceed UGX 40,000 has been increased to UGX 100,000.

File with the local office of the Uganda Revenue Authority, a personal inquiry form for each director and a corporate preliminary inquiry form, receive a tax Identification Number (TIN). Duration 3 days and Cost UGX O (Zero)

Apply for corporate tax number. Duration 1 day and Cost UGX 0 (Zero)

Apply for VAT registration. Duration 1 day and Cost UGX 0 (Zero)

The current threshold for VAT is only for businesses with annual returns of UGX 50 million and above. However, if a company’s quarterly returns amount to USH 12.5 million and above, it should register for VAT. Only registered income taxpayers may apply for VAT. An inspector from the Uganda Revenue Authority must inspect the business premises before a VAT certificate is issued.

An inspector from Uganda Revenue Authority (URA) comes to inspect your Uganda business premice. Duration 1 day and Cost UGX 0 (Zero)

Apply for Pay As You Earn (PAYE). Duration 1 day and Cost UGX 0 (Zero)

The pay-as-you-earn (PAYE) tax is paid by the employee but collected by the employer. This tax comes into effect later, upon the company becoming operational. Rates are applied depending on the employee’s yearly income; for instance, Employees earning below 1,560,000 do not pay PAYE, 10% is taxed on incomes exceeding UGX 1.56 million but not exceeding UGX 2,820,000. The amount increases as the income increases.

Obtain application forms for a Trading Licence. Duration 1 day

For ease of distribution of trading licenses, a decentralized system has been set up in which the 5 companies were appointed to collect dues on behalf of Kampala City Council (KCC) for each of the city’s five administrative divisions.

Licensing officer arranges to inspect your company premice and fills out an assessment form. Duration 1 day and Cost UGX 0 (Zero)

The trading license is a general Uganda business license required for all companies, including service companies. The issuing authority is the municipal authority in the jurisdiction where the business premises are situated. A trading license can be obtained almost instantly if the necessary documents on the nature of the intended Uganda business activities are available and the amount is assessed by the municipality or city council. Standard forms must be completed and submitted with the memorandum and articles of association and the certificate of incorporation.

Pay license fee at the bank. Duration 1 day

The founder must pay the relevant license fee at the bank, as follows:
- Opening office: UGX 156,500.
- Carrying out retail Uganda business: UGX 206,500.
- Carrying out wholesale Uganda business: UGX 366,500.

Obtain the trading license. Duration 1 day.

If it is deemed necessary, the municipal inspectors (health and building) reserve the right to revoke and cancel the trading license

File a form with the National Social Security Fund (NSSF). Duration 4 days and Cost UGX 0 (Zero)

The National Social Security Fund (NSSF) is governed by the revised laws of Uganda, the National Social Security Fund Act Cap 222. The NSSF is a compulsory saving scheme that covers all employees in the private sector, including non-governmental organizations and parastatal bodies that are not covered by the government pension scheme. Under the Act, every employer must register the company with the NSSF when it has 5 or more employees and all employees ages 16–35 must be NSSF members.

Make a company seal. Duration 2 days and Cost UGX 225,500

A company seal is mandatory.

And what about my employees?

This refers to gains or income that is not included in the chargeable income of the employee and therefore not taxable on the employee:

The employee’s income is below the taxable threshold, currently at Shs 235,000 (€) per month.
Pension.
Discharge or reimbursement of medical expenses actually incurred by the employee.
Life insurance premiums paid by a taxable employer (company/individual) for the benefit of the employee.
Expenses incurred by the employee; discharge or reimbursement for the employee on the official duty of the employer.
Meals and refreshments or value thereof provided to all employees at equal terms.
Employer’s contribution to a retirement fund for the benefit of the employee.
Any non-cash benefits whose value is less than Shs 10,000 a month.
Relief of 25% on terminal benefits for employees who have served the employer for at least 10 years.
Passage costs.
The employment income of an expatriate employee in
a listed Institution, under a technical assistance agreement subject to the Minister’s approval.
Official employment income of persons employed in the armed forces, Uganda Police Force and Uganda Prisons. t excludes persons serving there in a civilian capacity.
Employment income of Ugandans posted to work in Ugandan diplomatic missions abroad.
Employment income of persons employed by EADB.[4]

[4] https://www.ura.go.ug/Resources/webuploads/INLB/TAXATION%20HANDBOOK%20.pdf

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