Uganda: Tax proposals in pending legislation

Bills that would revise various tax laws in Uganda have been tabled before the Parliament

Bills that would revise various tax laws in Uganda have been tabled before the Parliament

Bills that would revise various tax laws in Uganda have been tabled before the Parliament.

Measures in the bills, once enacted, would revise the income tax, value added tax (VAT), excise tax, and various other tax laws. The measures are scheduled to have an effective date of 1 July 2021.

Among the provisions in the bills are proposals that would:

  • Amend the definitions of “beneficial owner” and “consideration for income tax” and what is an exempt organization
  • Separate rental income derived from more than one rental building
  • Exclude income from agro-processing from exempt income
  • Concern the exemption of income derived by manufacturers of certain products and the exemption of income by any other manufacturer that fulfils certain capital investment thresholds
  • Address the description of the allowable deduction for rental income earners
  • Amend the range of depreciation rates per class of depreciable assets and concerning the deferment of the “wear and tear” deduction on an asset that qualifies for initial allowance and the deferment of the industrial building allowance for buildings that qualify for Initial allowance
  • Concern the formula to compute expenses included in cost base of a business asset
  • Concern the non-recognition of capital gains from the sale of investment interest in a venture capital fund
  • Include a provision for the automatic exchange of information for tax purposes
  • Revise the due date of payment of income tax and for filing a refund claim application
  • Provide a withholding tax exemption regarding the sale of a business asset
  • Increase in the rate applicable for rental income tax realized by individuals from 20% to 30%

Regarding indirect tax and VAT measures, the proposals would:

  • Recognize the definition of bio-degradable packing material
  • Limit the period within which to claim an input tax credit
  • Require the filing of VAT returns by taxable persons
  • Concern the refund of tax for use of electronic receipts or invoices
  • Remove certain services from the schedule of exempt supplies (supplies exempt from VAT)
  • Change the rules for zero-rated supplies

Read an April 2021 report prepared by the KPMG member firm in Uganda

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