Uganda: Tax highlights in budget

Uganda: Tax highlights in budget

The 2016 budget, presented 9 June 2016, includes certain tax measures that focus on the oil and gas industry. For instance, there is a proposal to expand the definition of “licensee” to include a person undertaking petroleum exploration. Also, for petroleum exploration licenses granted after 2015, allowable deductions would be subject to the limitations on deductions under the production sharing agreement.

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Another measure would provide a requirement for midstream operators to register for value added tax (VAT) purposes, even if they are not making taxable supplies, in a bid to relieve persons undertaking midstream operations.

Among the other income tax proposals are measures that would:

  • Limit carryforwards of tax losses when there is a change in the ownership of a company of 50% or more, unless the surviving company continues to conduct the same business as it did prior to the change and does not engage in any new business or investment after the change
  • Impose a withholding tax on rent paid to non-residents at a rate of 15% 
  • Aim at “treaty shopping” so that the ultimate beneficiary of the treaty benefit would need to reside in Uganda
  • Impose a withholding tax obligation on payments made to non-resident persons for telecommunications, and air transport and shipping services
  • Exempt from income tax, allowances paid to Members of Parliament

 

Read a June 2016 report [PDF 3.1 MB] prepared by the KPMG member firm in Uganda: Budget Brief

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