Taxation of international executives.
When are tax returns due? That is, what is the tax return due date?
The final return is due by 31 December
What is the tax year-end?
Uganda’s fiscal and tax year end is 30 June. However, a person may be permitted to use a year end other than 30 June upon approval by the tax authority.
What are the compliance requirements for tax returns in Uganda?
Pay as You Earn (PAYE) - Filing by the employer is on a monthly basis by the 15th day of the month following the month in which payment was made.
Individual Income Tax returns are filed by 30 September (1st Provisional return), 30 June (amended provisional Return) and 31 December being the end of 6 months after the end of the year (Final Return). Please note that the provisional tax is paid in four installments on a quarterly basis.
Rental income is taxed separately from other incomes earned. The tax on rental income is also paid on a quarterly basis as with the other income tax.
What are the current income tax rates for residents and non-residents in Uganda?
Income tax table for 2018
Resident individual rates per month, in Ugandan shilling (UGX)
|Chargeable income||Rate of Tax|
|Not exceeding UGX 235,000 per month||Nil|
|Exceeding UGX 235,000 per month but not exceeding UGX 335,000 per month||10% on the amount exceeding UGX235,000|
|Exceeding UGX 335,000 but not exceeding UGX 410,000 per month||UGX 10,000 per month plus 20% of the amount exceeding UGX 335,000 per month|
|Exceeding UGX 410,000||
UGX 25,000 plus 30% of the amount exceeding UGX 410,000; and
Where the chargeable income of an individual exceeds UGX 10,000,000, an additional 10% on the amount exceeding UGX 10,000,000 per month
Nonresident individual rates per month
|Chargeable income||Rate of Tax|
|Not exceeding 335,000 per month||10%|
|Exceeding UGX 335,000 per month but not exceeding UGX 410,000||UGX 33,500 plus 20% of the amount by which the amount exceeds UGX 335,000|
|Exceeding UGX 410,000||
.UGX 48,500 plus 30% of the amount exceeding UGX 410,000; and
Where the chargeable income of an individual exceeds UGX 10,000,000, an additional 10% on the amount exceeding UGX 10,000,000 per month.
Local Service Tax
This is deducted within the first quarter of the Individual's fiscal year (1 July to 30 June). This may be submitted either as a lump sum by the 30th day of October or in 4 equal installments by the end of July, August, September and October.
Local Service Tax rates
|Amount of monthly income||LST payable
|earned net of tax (UGX)||per year (UGX)|
|1||>UGX100,000 but <UGX200,000||UGX5,000|
|2||>UGX200,000 but <UGX300,000||UGX10,000|
|3||>UGX300,000 but <UGX400,000||UGX20,000|
|4||>UGX400,000 but <UGX500,000||UGX30,000|
|5||>UGX500,000 but <UGX600,000||UGX40,000
|6||>UGX600,000 but <UGX700,000||UGX60,000|
|7||>UGX700,000 but <UGX800,000||UGX70,000|
|8||>UGX800,000 but <UGX900,000||UGX80,000|
|9||>UGX900,000 but <UGX1,000,000||UGX90,000|
For the purposes of taxation, how is an individual defined as a resident of Uganda?
The Ugandan Income Tax Act, Cap 340 states that for an individual to be considered a resident person, they should;
A person is not resident if they do not meet the parameters for a resident individual.
Is there a de minimus number of days rule when it comes to residency start and end date? For example, a taxpayer can’t come back to the host country/territory for more than 10 days after their assignment is over and they repatriate.
What if the assignee enters the country/territory before their assignment begins?
Residency depends on the number of days present in Uganda. The number of days is counted from when the individual is present in Uganda and this information is usually obtained from the date of entry/departure in the passport.
Are there any tax compliance requirements when entering or leaving the country/territory?
When leaving the country/territory, an individual is required to de-register for taxes and notify the tax authorities and immigration. It is also advisable for the exiting assignee to obtain a tax credit certificate as it may be needed in the assignee’s home country/territory as evidence that their income was taxed while in Uganda.
If the assignee has been contributing the social security, they will be required to make an application for the social security claim.
When arriving in Uganda, an assignee will be required to apply for and obtain a Tax Identification Number, a social security number and the relevant visas/work permits. Social security registration is mandatory ONLY if the expatriate intends to stay in Uganda for more than 3 years and the employer has at least 5 employees.
What if the assignee comes back for a trip after residency has terminated?
There is no restriction, however the assignee would be requited to obtain a tourist visa.
Do the immigration authorities in Uganda provide information to the local taxation authorities regarding when a person enters or leaves Uganda?
It is not common for immigration authorities to share information with the tax authorities. However, the taxation authorities may communicate to the immigration authorities if the assignee has outstanding taxes to be paid to the tax authority.
Will an assignee have a filing requirement in the host country/territory after they leave the country/territory and repatriate?
No. Once an assignee has left Uganda and de-registered for taxes, there is no requirement to file tax returns in Uganda.
Do the taxation authorities in Uganda adopt the economic employer approach to interpreting Article 15 of the Organisation for Economic Co-operation and Development (OECD) treaty? If no, are the taxation authorities in Uganda considering the adoption of this interpretation of economic employer in the future?
The taxation authorities exempt employment income if the conditions as set out in Article 15 of the OCED treaty are met. For anyone to benefit from the treaty, they must be resident in the other contracting state.
Are there a de minimus number of days before the local taxation authorities will apply the economic employer approach? If yes, what is the de minimus number of days?
What categories are subject to income tax in general situations?
Employment income including benefits of any kind provided to the assignee by virtue of their employment in the company. The taxable benefits include:
Intra-group statutory directors
Will a non-resident of Uganda who, as part of their employment within a group company, is also appointed as a statutory director (i.e. member of the Board of Directors in a group company situated in Uganda trigger a personal tax liability in Uganda, even though no separate director's fee/remuneration is paid for their duties as a board member?
Directorship of the company is defined as employment under Section 2(z) (ii) of the Income Tax Act. Based on this, the remuneration to a Director who is a member of a Board of Directors for a company situated in Uganda would be subject to tax in Uganda.
a) Will the taxation be triggered irrespective of whether or not the board member is physically present at the board meetings in Uganda?
Yes. As long as the Director is remunerated for their role as Director of the Ugandan entity, their remuneration will attract tax in Uganda.
b) Will the answer be different if the cost directly or indirectly is charged to/allocated to the company situated in Uganda (i.e. as a general management fee where the duties rendered as a board member is included)?
Yes. In case the costs are directly or indirectly charged to the company in Uganda, the taxation of this income is triggered in respective of whether the member is physically present at the board meetings.
c) In the case that a tax liability is triggered, how will the taxable income be determined?
The taxable income would be the cost that is directly or indirectly booked relating to the payment to the directors.
Are there any areas of income that are exempt from taxation in your country/territory? If so, please provide a general definition of these areas.
Are there any concessions made for expatriates in your country/territory?
Yes. This is dependent on the bi-lateral agreements between the Government of Uganda and the Foreign Government or International Development Agency.
Is salary earned from working abroad taxed in Uganda If so, how?
For assignees who meet the definition of residents as defined above, income from all geographical areas is taxed. However, they are entitled to credits of tax paid abroad. This does not apply to short term residents who are present in Uganda for a period of not more than 2 years.
Are investment income and capital gains taxed in your country/territory? If so, how?
We summarize below the applicable rates of tax.
|Description||Amount of tax|
|Dividend and interest income||15%|
For resident individuals, the tax rate is 20% of the chargeable income exceeding 2,820,000.
Nonresidents are taxed at 15% on the rental income earned
Yes. This is included in the individual’s employment income and taxed based on the PAYE rates as stated above.
Yes, capital gains are taxed at the individual income tax rates specified above.
Yes for resident individuals.
The income derived from Uganda by a non-resident trust is taxed either to the trustee or to the beneficiaries of the trust at a rate of 30 percent.
Are there capital gains tax exceptions in your country/territory? If so, please discuss.
Yes. The following categories are exempt from CGT:
Assets are deemed to be disposed when the asset has been:
What are the general deductions from income allowed in your country/territory?
Expenses or losses incurred by the person in the production of income included in gross income for the year of income.
What are the tax reimbursement methods generally used by employers in your country/territory?
How are estimates/prepayments/withholding of tax handled in your country/territory? For example, Pay-As-You-Earn (PAYE), Pay-As-You-Go (PAYE), and so on.
Withholding tax and PAYE are accounted for on a monthly basis.
When are estimates/prepayments/withholding of tax due in your country/territory? For example, monthly, annually, both, and so on.
Withholding tax and PAYE is accounted for within 15 days after the end of the month in which payment was made.
Provisional income tax returns are paid in four installments on a quarterly basis.
Is there any Relief for Foreign Taxes in your country/territory? For example, a foreign tax credit (FTC) system, double taxation treaties, and so on?
Yes, to the extent that the foreign tax was paid and does not exceed the tax that would have ordinarily been paid had the income been earned in Uganda.
What are the general tax credits that may be claimed in your country/territory? Please list below.
Provisional tax paid
Foreign tax credits
Withholding tax credits