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Uganda - Income Tax

Uganda - Income Tax

Taxation of international executives.

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Tax returns and compliance

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 30th September (1st Provisional return), 30th June (amended provisional Return) and 31 December being the end of six 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.

Tax rates

What are the current income tax rates for residents and non-residents in Uganda?

Residents

Local Service Tax

This is deducted within the first quarter of the Individual's fiscal year (1st July to 30th June). This may be submitted either as a lump sum by the 30th day of October or in 4 equal installments for the months 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
10 >UGX1,000,000 UGX100,000

 

Income tax table for 2018

Resident individual rates per month

Chargeable income Rate of Tax
Not exceeding Ushs. 235,000 per month Nil
Exceeding Ushs. 235,000 per month but not exceeding Ushs. 335,000 per month 10% on the amount exceeding Ushs 235,000
Exceeding Ushs. 335,000 but not exceeding 410,000 per month Ushs. 10,000 per month plus 20% of the amount exceeding Ushs.335,000 per month
Exceeding Ushs. 410,000

Ushs. 25,000 plus 30% of the amount exceeding Ushs. 410,000; and 

Where the chargeable income of an individual exceeds 10,000,000, an additional 10% on the amount exceeding Ushs 10,000,000 per month 

 

Nonresident individual rates per month

Chargeable income Rate of Tax
Not exceeding 335,000 per month 10%
Exceeding Ushs 335,000 per month but not exceeding Ushs. 410,000 Ushs 33,500 plus 20% of the amount by which the amount exceeds Ushs. 335,000
Exceeding Ushs 410,000

Ushs. 48,500 plus 30% of the amount exceeding Ushs. 410,000; and

Where the chargeable income of an individual exceeds Ushs. 10,000,000, an additional 10% on the amount exceeding Ushs 10,000,000 per month.

Residence rules

For the purposes of taxation, how is an individual defined as a resident of Uganda?

Residents

The rate of tax applicable to an individual depends on their residency status. The Ugandan Income Tax Act, Cap 340 states that for an individual to be considered a resident person, they should;

  1. have a permanent home in Uganda; or
  2. be present in Uganda –
    • for a period of, or periods amounting in aggregate to, 183 days or more in any twelve-month period that commences or ends during the year of income; or
    • during the year of income and in each of the two preceding years of income for periods averaging more than 122 days in each such year of income.

Non-residents

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 for more than 10 days after their assignment is over and they repatriate.

No.

What if the assignee enters the country 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.

Termination of residence

Are there any tax compliance requirements when entering or leaving the country?

When leaving the country, 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 as evidence that his/her income was taxed while in Uganda.

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.

Departure tax

When leaving the country, an individual is required to de register for taxes and obtaining a tax credit certificate would be appropriate as evidence that his/her income was taxed while in Uganda.

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.

Communication between immigration and taxation authorities

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.

Filing requirements

Will an assignee have a filing requirement in the host country after they leave the country and repatriate?

No

Economic employer approach

Do the taxation authorities in Uganda adopt the economic employer approach to interpreting Article 15 of the 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.

De minimus number of days

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?

Yes.

Types of taxable compensation

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;

  • Accommodation
  • Education allowance
  • Meals (provided it is not provided at the employers’ premises or during the course of operations.
  • Private travel
  • And any other benefit provide to the employeeback

Tax-exempt income

Are there any areas of income that are exempt from taxation in your country? If so, please provide a general definition of these areas.

  • Any benefit that is provided to an employee with a value not exceeding Ushs. 10,000 (currently equivalent to USD 2.8)
  • 10% monthly NSSF contribution for employees.
  • Medical and life insurance provided to an employee. Please note that Life insurance exemption only applies where the employer is a tax paying entity.
  • Cost of passage to and from Uganda in respect to the particular employment to be exercised in Uganda.

Expatriate concessions

Are there any concessions made for expatriates in your country?

Yes. This is dependent on the bi-lateral agreements between the Government of Uganda and the Foreign Government or International Development Agency.

Salary earned from working abroad

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.

Taxation of investment income and capital gains

Are investment income and capital gains taxed in your country? If so, how?

Dividends, interest, and rental income

Yes.

We summarize below the applicable rates of tax.

Description Amount of tax
 Dividend and interest income 15%
Rental income

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

Gains from employee stock option exercises

Yes. This is included in the individual’s employment income and taxed based on the PAYE rates as stated above.

Foreign exchange gains and losses

Yes

Principal residence gains and losses

No

Capital losses

Yes, capital gains are taxed at the individual income tax rates specified above.

Personal use items

Yes

Gifts

Yes

Foreign property reporting

Yes for resident individuals.

Non-resident trusts

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%.

Additional capital gains tax (CGT) issues and exceptions

Are there capital gains tax exceptions in your country? If so, please discuss.

Pre-CGT assets

Yes. The following categories are exempt from CGT

  • A transfer of an asset between spouses;
  • A transfer of an asset between former spouses as part of a divorce settlement of bona fide separation agreement;
  • An involuntary disposal of an asset to the extent to which the proceeds are reinvested in an asset of a like within one year of the disposal; or
  • The transmission of an asset to a trustee or beneficiary on the death of a taxpayer.
  • Any capital gain not included in business income

Deemed disposal and acquisition

Yes

Assets are deemed to be disposed when the asset has been;

  • Sold, exchange, redeemed or distributed by the tax payer
  • Transferred by the tax payer by way of gift
  • Destroyed or lost; or
  • When there is a direct or indirect change of ownership of the company by 50% or more.

General deductions from income

What are the general deductions from income allowed in your country?

Expenses or losses incurred by the person in the production of income included in gross income for the year of income.

Tax reimbursement methods

What are the tax reimbursement methods generally used by employers in your country?

Tax equalization.

Calculation of estimates/prepayments/withholding

How are estimates/prepayments/withholding of tax handled in your country? 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? 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.

Relief for foreign taxes

Is there any Relief for Foreign Taxes in your country? 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.

General tax credits

What are the general tax credits that may be claimed in your country? Please list below.

Provisional tax paid
Foreign tax credits
Withholding tax credits

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