In Uganda, a business can be set up by a sole trader / individual, in partnership, private or public limited liability companies.
Registering A Company
Registering your Investment in Uganda
| Steps to register your investment with UIA
1. Register your company at the Uganda Registration Services Bureau to obtain a Certificate of Incorporation.
2. Apply for an investment license with UIA using Form 1; attach a Certificate of Incorporation plus a brief Business Plan. Normal processing time for an investment license is between 2-5 working days.
3. Secure secondary clearances. Certain sectors require secondary licenses e.g. for mining, petroleum, transport, banking, telecommunications. UIA will assist you to secure these licenses within reasonable time and also help you obtain suitable industrial land and work permits for your expatriate staff. Utilities like water, telephone, and electricity can easily be secured from relevant offices.
It is mandatory to register your business with Uganda Revenue Authority (URA), upon commencement of business. Unincorporated bodies and individuals are expected to file a Preliminary Enquiry Form with the nearest URA office.
For companies, the following are also required:
• Completed Internal Revenue Company application Form, IR (CO);
• Memorandum and Articles of Association;
• Names and addresses of Directors and Shareholders; and
• Copies of vending agreement (if an already established business has been purchased). Once the above process has been completed, and upon receipt of a file number, the investor can apply for a Tax Identification Number (TIN) from URA by completing TIN application forms
The Uganda Tax System can be summarised within Six (6) major Elements.
• Individual and Corporate income tax,
• Value added tax (VAT) on goods and services,
• Import and Excise duties, and
• Stamp duty.
• Pay As You Earn (PAYE).
• Rental Tax
Taxes are collected by self-assessment and by withholding tax on payments to residents and nonresidents. Penalties and interest are charged for non-compliance and late payment of taxes.
The Uganda Revenue Authority is the overall Government agency mandated to assess, collect specified tax revenue, administer and enforce laws relating to such revenue.
Corporate and Individual Income Tax
Tax rates are governed by the Income Tax Act, July 2012. The rates are subject to change on amendment of Tax legislation. All registered business organizations are under obligation to send a provisional return of income to the URA for any year of income.
Pay as You Earn (PAYE) Tax
An Employer is obliged to withhold and account for income tax on employees’ remuneration and benefits (the PAYE system).
Computation of PAYE
PAYE is calculated and remitted to the URA on a monthly basis. Computation is as follows:
The Income Tax Rates Applicable To Resident Individuals
The Income Tax Rates Applicable To Non-Resident Individuals
|Monthly Chargeable Income||PAYE Monthly Tax Rates|
|Not exceeding Ushs. 335,000 pm||10%|
|Exceeding Shs. 335,000 but not exceeding Shs. 410,000 pm||10% of the amount by which chargeable income exceeds Shs.235,000pm.|
|Exceeding Shs. 335,000 but not exceeding Shs. 410,000||Shs. 33,500 + 20% of the amount by which chargeable income exceeding Shs. 335,000|
|More than Shs. 410,000||(c) UShs.48,500 + 30% of the amount by which chargeable income exceeding Shs. 410,000; and (d) Where the chargeable income of an individual exceeds Ushs.10,000,000 pm, an additional 10% charged on the amount by which chargeable income exceeds 10,000,000 pm.|
Tax on Rental Income
|Individual Rental Income Tax||Rate of Tax 20%. Computed at 80% of Gross Rent after allowing a threshold of Shs 2,820,000|
Tax on Corporate Income
|Corporate Income Tax Structure||Rate of Tax|
|Non Resident Companies||30%|
|Mining Companies||25 – 45%|
Withholding Tax StructureWithholding taxes are a form of income tax deducted at source by one entity upon making a payment to another entity. In Uganda, there are three categories of withholding tax, the most significant of which is PAYE; others are withholding tax on payments and earnings other than employment earnings as well as withholding tax on imports.
|This tax is deducted by receivers of services provided by contractors together with suppliers of goods and on goods imported at CIF. It is reimbursable at the end of the financial year on the presentation of the customs receipt. A summary of withholding taxes payable appears below:|
Summary of Withholding Taxes in Uganda
|Resident (%)||Non Resident|
|Management and Professional Fees||6||15|
|Rent or use of property||15||15|
|Domestic local works||6||6|
|Natural resources payments||0||15|
|Tax on Commercial Transactions||6% of Gross Payment|
|Tax on Professional Services||6% of Gross Payment|
|Tax on Imports||6% of Custom of Gross Custom Value of Goods Imported|
|Dividends/Interest||15% of Gross Payment|
|Non Residents||15% of Gross Payment|
|Shipping & Aircrafts||2% of Gross Payment|
If you buy an asset, for example, a car, tools, machinery or other equipment for use in your business, you cannot deduct your expenditure on that asset from your trading profits. Instead, you may be able to claim a capital allowance for that expenditure.
Capital Allowances are also available for certain building-related capital expenditure. The aim is to give tax relief for deduction in value of qualifying assets that you buy and own for business use.Summary of Capital Deductions under the Income Tax 1997
|Type of Allowance||Rate and Conditions|
|Start-up Costs||25% on Actual cost per annum for 4 years|
|Depreciation||Granted on Cost base incurred.
|Initial Allowance granted in first year of use||50% on cost base of plant & machinery. Industries located in prescribed areas: Kampala, Entebbe, Namanve, Jinja and Njeru.|
|Initial Allowance granted in first year of use||75% on cost base of plant & machinery. Industries located outside prescribed areas.|
|Initial Allowance granted in first year of use of an Industrial Building||20% on cost base of the industrial building.|
|Scientific Research||100% on actual cost of scientific research incurred.|
|Training Expenditure||100% on actual cost of training incurred.|
|Mineral Exploration||100% on actual expenditure cost incurred on Mineral testing and exploration.|
|Deductable annual Industrial Buildings Allowance||5% on cost base net of initial deduction on a straight line basis.|
Value Added Tax (VAT)
VAT is governed by the Value Tax Act 1996. The VAT rate on goods and services is 18%. There are zero rated and exempt supplies.
Stamp Duty is an indirect tax levied on the commercial transactions listed below: Schedule of Stamp Duty is an in
|Company Incorporation or increase of share capital||0.5%of share capital|
|Transfer of stock or marketable securities||1%of the value of stock or securities|
|Transfer of immovable property||1%of property value|
|Lease||1% of value of lease|
|Debenture or mortgage||0.5% of amount of the debenture or mortgage|
Excise duty and import duty are levied on different categories of products. The applicable rates of duty per product are spelt out in the Finance Bill Harmonized Tariff Code.
Tax and Regulatory Institutional Arrangements In Uganda
- Sector Tribunal Institutional Arrangements
- Tax Tribunal, Electricity Tribunal, Insurance Tribunal
- Sector Regulatory Authorities
- Uganda Communication Commission
- Civil Aviation Authority
- Coffee Development Authority
- Cotton Development Authority
- Electricity Regulatory Authority
- Uganda Investment Authority
- National Information Technology Authority
- Uganda Revenue Authority
- National Forestry Authority
- Retirement Benefits Authority
- National Environment Management Authority
- Dairy Development Authority.
- The Judicial Institutional Structure for Commercial Justice – Commercial Court
Business Registration and Secondary Licensing Arrangements
It is a requirement for secondary licences to be obtained in specific sectors for example; Health, Mining, Agriculture, Fisheries, Environment and Education. These can be obtained from the sector ministries and agencies.
Tax Objections and Appeals
A taxpayer dissatisfied with a tax assessment can lodge an objection with the Commissioner of Income Tax who is required to review the assessment. If the taxpayer is not satisfied with the review, the investor can appeal to the Tax Appeals Tribunal. The Tribunal is a specialist tax tribunal that deals with disputes between the URA and taxpayers. In case one is not satisfied with the tribunal ruling, one can appeal to the High court.
Employment is governed by the Employment Act 2006. There is no minimum wage.
Investment Incentive Regime
Uganda government offers a fair incentives package that provides generous capital recovery terms, especially if your project will entail significant investment in plant and machinery and you're likely to yield profits over the longer term. Information and the details can be obtained at Uganda Investment Authority.
Sector Specific Incentives
Sector specific incentives are available in the following sectors: Tourism, Agriculture, ICT (BPO), Renewable Energy (Solar and Rural Electrifications), Education, Health, etc. For further information please consult UIA.
A Diaspora incentives regime is being developed as part of the Diaspora Policy.
The UIA One-stop-shop
The Uganda Investment Authority One Stop Shop is a free service set up in partnership with Uganda Revenue Authority, Immigration Department, and Uganda Registration Bureau Service to facilitate investors who come via UIA with:
- Company registration
- Tax information, rights incentives and obligations, registration with Uganda Revenue Authority, clearance of machinery and equipment.
- Immigration and issue of work permits where required