Types Of Taxes In Uganda

Types Of Taxes In Uganda. Almost everyone knows what taxes are and that there is rarely an organized society without a tax system. The leaders utilise the resources gotten in the form of tax to ensure the growth and development of society. 

Uganda is not an exemption. Just like other African countries, there is a tax system in place here too. Nevertheless, the system in Uganda is more lenient when compared to other sub-Saharan African nations. Unlike other countries that take about 23 percent of gross domestic product (GDP) in revenue, here, taxes are low.

Having explained this, we can now explain that Uganda’s principal taxes are: 

Types Of Taxes In Uganda

  1. Income tax
  2. Business tax 
  3. VAT (Valued added tax). 

Let’s explore the types of tax in Uganda.

Personal Income Tax

All residents of Uganda are meant to pay personal income tax on their income. Of course, this doesn’t mean non-residents of the whose income comes from platforms in Uganda won’t pay any taxes – they are also required to pay the tax.

As far as the tax system is concerned, a person is concerned a resident of Uganda if such a person has a permanent home in the nation. This also includes Ugandan who is sent abroad, but present in Uganda for 183 days out of the tax year. It also includes employees who are present in the country for an average of 122 days per year for 3 consecutive years. It is important to take note of the category one is, to avoid cases of “ignorant tax evasion”

Business Income Tax

The government also levies income tax on the worldwide income of resident businesses. So, if your company is in Uganda making money (that is, your company have a visible presence in the country), you are required to pay tax. Additionally, if you have a non-resident company, you are still taxed only on income sourced in Uganda. 

Asides mining firms, the rate agreed for other companies is 30%. It should be noted that income tax for mining firms (as far as Uganda is concerned) is calculated using a method and is dependent upon the chargeable income and gross revenue of the firm. Nevertheless, it should be noted that the tax rate arrived at must be at least 25% and at most 45%.

For clarity purposes, the country actually has actually determined special tax rates for small firms that have yearly sales between five million and fifty million Ugandan shillings. That is thoughtful? Well, the special rates are determined based upon the gross income of the business.

Value Added Tax

Value added tax (VAT) is actually required on every taxable supply that is made by a taxable person. It also covers all imported goods and the supply of any imported services by anyone. 

Taxable persons are those that make taxable supplies that are valued at one-quarter of the annual registration threshold during three calendar months of the year. Taxable supplies are goods/services that are made under the business activity of a taxable being. 

In Uganda, taxable persons must register, and the annual registration threshold is around 50M  Ugandan shillings. It should also be noted that the standard rate for VAT in the country is 18%.

Important Tax Information In Uganda 

Let’s explore further:

  1. Utility Companies 

Utility firms (one that provides electric power, gas, or water) are required to pay a miscellaneous gross receipt tax if such are situated in incorporated cities and towns with populations of 1,000 and above. 

It should be noted that the population is determined from the last federal census – firms that are incorporated after that particular census exercise do not pay the tax until they are counted when the next census comes. 

We should also add that taxes are due four times a year, on the last day of the month following the end of the calendar quarter. 

  1. Mixed Beverages

There is a mixed beverage gross receipts tax that must be paid by restaurants and others selling mixed alcoholic drinks.

So, receipts to be utilised to get the tax include those for ice and any nonalcoholic beverages which are mixed with alcoholic beverages in the area. 

It must be noted that this tax is levied only on the place selling the drinks, and they must not make their customers pay the charges. Additionally, it is also illegal that they add to the price of the drink they should serve their customers. 

  1. For tax returns and compliance (when tax returns are due), the final return is due by 31 December. Also, for the tax year-end, you need to know that the country’s fiscal and tax year-end is 30 June. 

Nevertheless, it was made known that you may be permitted to use a year-end other than 30 June upon approval by the tax authority.

  1. As far as the compliance requirements for tax returns in Uganda are concerned, you should take note of these. First, Pay as You Earn: filing by the employer is on a monthly basis by the fifteenth day of the month after the month in which payment was made.

Individual Income Tax returns are known to be filed by:

–  30 September (1st Provisional return)

–  30 June (amended provisional Return)

– 31 December (Final Return).

It should be noted that the provisional tax is paid in four installments on a quarterly basis.

  1. Rental income in Uganda is taxed separately from other incomes earned. It should also be added that the tax on rental income is also paid on a quarterly basis as with the other income tax.

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Closing On Type Of Taxes In Uganda

In conclusion, just like other countries in the world, Uganda has her own tax system which she derives resources used for growth and development. Everyone that is meant to pay tax should pay what is due as quickly as possible so as to avoid having issues with relevant authorities. With a lot of revenue, the government of the day can build relevant and critical infrastructures that will enhance critical aspects of the country. 

Tax: Types of Tax In Uganda