NEW TAX LAWS in UGANDA 2014/2015
The 2015/2016 budget introduced several tax proposals several of which have been embodied in the law. The notable new tax laws are therefore as follows:
A. Income Tax Proposals
1.
Requirement of Tax
Identification Numbers( TINs)
a.
Suppliers to be
registered for tax
The
Income Tax Act was amended to disallow expenditure incurred by tax payers who
fail to provide TINS of their suppliers of goods and services.
Penalty: No deduction shall be
allowed for any expenditure exceeding 5 (five) million Uganda shillings on
goods and services from a supplier who has no tax identification number. S.22
b.
Requirement for a TIN
to obtain licenses or any form of authorisation to conduct business in Uganda
There
is now a further requirement making tax identification numbers (TINs) a
mandatory requirement for issuance of licenses or permits generally. An amendment
provides that every local community, Government Institution or regulatory body
shall require a TIN from any person who applies for a license or any form of
authorisation to conduct business in Uganda. S.24
2.
Reduce rate of
withholding tax on reinsurance services
Part XI of the Third schedule to the Income
Tax Act was amended to reduce the
withholding tax rate of re-insurance premiums from 15% to 10%. A person
who makes a payment of premium for reinsurance services to a non-resident
person shall now be required to withhold tax on the gross amount of that
payment at the rate of 10%.
3.
Increase presumptive
tax annual gross turn over threshold from 50M to 150 M.
The
2nd Schedule to the Income Tax Act has been amended to increase the
threshold of annual gross turn over from UGX 50Million to UGX 150 Million for
presumptive tax payers. The position is reflected below:
UGX>50<75million
per annum--UGX 937,500 or 1.5% of gross turnover (whichever is lower)
UGX>75 <100
Million per annum---UGX 1,312,500 or 1.5% of gross turnover (whichever is lower)
UGX
>100<125Million per annum---UGX 1,687,500 or 1.5% of gross turnover (whichever
is lower)
UGX >125<150
Million per annum—UGX 2,062,500 or 1.5% of gross turnover (whichever is lower)
For
tax payers whose businesses have a turnover of less than 50 Million Shillings,
the tax treatment varies depending on the business being conducted by the tax
payer. Some of the business listed are workshops, general trade, garages, drug
shops, in Kampala City and its Divisions
,in Municipalities and towns according
to the grades I, II & III. The rates vary from UGX 550,000/= to UGX
100,000/=.
4.
Thin capitalisation
a.
Increase of the debt
to equity ratio
The
debt to equity ratio in relation to borrowing by foreign controlled entities in
Uganda has been increased. The ratio has
now been increased from 1:1 to 1: 1.5.
b.
Branch
The
thin capitalisation rule also now extends to a branch of a non-resident
company. This is a new development. (S.79). The debt to equity obligations is
computed with reference to the debt obligations attributable to the branch
together with the equity of the non-resident company conducted through the
branch.
5.
Expanded scope of
withholding tax (Reduction of exemptions)
The
list of items exempt from withholding tax has been narrowed by excluding all
but two of the items previously listed. The two remaining items that are still
exempt for the tax are importations by exempt organisations listed in the
Income tax Act and a supplier who is exempt from tax under the Act or who the
Commissioner is satisfied has regularly
complied with the obligations imposed on
the supplier or importer.
6.
Advance tax by
persons in the transport sector
A new amendment requires payment of income tax
in respect of all goods motor vehicles with a load capacity of more than 2
(two) tonnes and passenger service vehicles before renewal of their annual operational
licenses.
The rates are;
-for goods vehicles; UGX 50,000/= per ton per
annum
-for passenger vehicles: UGX 20,000 per
passenger per annum
13. Exempt Institutions (Listed Institutions)
The listed institutions that are exempt from
tax under Section 21 of the Income tax Act has been updated by including “Global Fund to fight AIDS, Malaria and
Tuberculosis” in the First Schedule to the Income Tax Act.
D. Excise Duty Amendments
1. Excise
Duty in Respect of Excisable Goods and Services.
(i)
Cigarettes
Under
the Excise Duty (Amendment) Act, 2015, there is an increase in the excise duty
on cigarettes as shown below:
a) Soft
Cap;
previous rate of excise duty is Ushs 35,000 per 1,000 sticks, the amended rate
of excise duty is Ushs 45,000 per 1,000 sticks.
b) Hinge
lid;
previous rate of excise duty is Ushs 69,000 per 1,000 sticks, the amended rate
of excise duty is Ushs 75,000 per 1,000 sticks.
(ii)
Beer
a) Whose local raw
material content, excluding water is at least 75% by weight of its constituent,
previous rate of excise duty was 20% and the amended rate of excise duty is 30%.
b) Beer produced from
barley grown and malted in Uganda- 30%
(iii)
Spirits
a) Un-denatured spirits
·
Previous
rate of excise duty was Ushs 4,000 per litre or 140% whichever is higher
·
Amended
rate of excise duty is Ushs 2,500 per litre or 100% whichever is higher.
(iv)
Wine
b) Other wines, previous
rate of excise duty was 70% and amended rate of excise duty is 80%.
(v)
Fuel
a) Motor spirits
(gasoline) previous rate of excise duty was Ushs 950 per litre and amended rate
of excise duty is Ushs 1,000 per litre
b) Gas oil (automotive,
light, amber for high speed), rate of excise duty was Ushs 630 per litre and the
amended rate of excise duty is Ushs 680 per litre.
(vi)
Telecommunications
Services
Excise duty has been removed from incoming
calls from Kenya, Rwanda and South Sudan. The rest of the other incoming calls from
other countries shall be charged duty at a rate of USD0.09 per minute.
(vii)
Motor vehicle lubricants
The
rate of excise duty introduced is 5%.
(viii)
Chewing gum, sweets
and chocolates
The rate of excise duty introduced is 10%.
(ix)
Furniture
The
excise duty rate introduced is 10%.
E.
Environmental Levy for motor vehicles
Environmental levy has been enhanced and the age of a
car subject to the levy has been lowered.
The motor vehicles (excluding goods vehicles) which
are between 5- 10 years old and above are subject to environmental levy at 25%
to 35% of the CIF value.
Further, motor vehicles (excluding goods vehicles)
which are 10 years old or more shall be subject to environmental levy at 50% of
the CIF value.
These new laws will make importation of the
abovementioned vehicles of 5 years old and above more costly.
F. Travel Documents
a. Revised application fees for passports
Increased
passport fees by Ushs 30,000/=
Type
New
Diplomatic
Ushs 150,000
Official
Ushs 150,000
Ordinary
Ushs 150,000
East
African
Ushs 80,000
Conventional
Travel Documents (CTDs)
Ushs 120,000
Passports
processed within 48 hours (introduced)
Ushs 300,000
Single
entry visa
USD 80.
b.
Prepayment fee on
applications for work permits of USD 1500
This
is by virtue of the Finance Act, 2015. This fee applies only to the Work permit
application of certain classes.
G. Annual Operator License Fees
·
Annual
operator license fees in respect of vehicles have been imposed.
The
following vehicles are be affected:
Country
taxis
Ushs 200,000
Rental
vehicles Ushs 200,000 to Ushs 500,000
Town
taxicabs Ushs 200,000 to Ushs 500,000
Tourist
vehicles Ushs 200,000 to Ushs 500,000
Goods
operator vehicles Ushs 300,000 to Ushs 700,000
Motor
cycles used for boda boda Ushs 30,000
·
Operator
licenses for cargo vessels (inland water vessels) and Research and Leisure have
also been amended.
H. Value Added Tax Laws
These
are the following changes;
(i) Annual
registration threshold
The
annual registration threshold has been increased to UGX 150 million shillings
from UGX 50 million shillings)
(ii) Qualification
for cash accounting basis
The
annual turnover of taxable person who qualifies for cash basis accounting has
been increased to 500 million shillings from UGX 200 million shillings] –
Section 26(1) VAT Act.
(iii) New Zero rated goods & services
·
the
supply of cereals grown and milled in Uganda [ this reverses the 2014 amendment
which made them standard rated]
·
the
supply of handling services provided by the National Medical Stores in respect
of medicines and other medical supplies, funded by donors.
(iv) Public International Organisations;
The
following were added to the list of Public international organisations.
§ Global fund to fight
AIDS, Malaria and Tuberculosis
§ Uganda Red Cross
Society
(v) Special
provision for taxation of mining and petroleum operations
Credit for input tax
Section 28(1) (b) to the VAT Act was amended
so that a credit is allowed to the licensee conducting petroleum operations of
all imports of goods made by that person or import of services made by a
licensee during the tax period.
(vi) Refund
of Overpaid Tax.
Section 42(2) (a) of the VAT Act was amended
with regards to input tax credits that can be claimed by a Licensee tax payer.
The effect is to replace “investment trader” with “licensee”. A definition for
a “licensee” has been inserted as being a person granted a mining right or a
person with whom the Government has entered into a petroleum agreement.
H. EAC Customs Laws
·
Varying of import
duty for goods and passenger vehicles
& road tractors for semi-trailers
The
import duty on certain items has been greatly reduced by Uganda, Rwanda and
Burundi by staying the EAC CET application as shown below;
Item Previous duty
New duty
a) Road tractors for semitrailers from 10% to 0%
b)Motor vehicles for
transportation of
goods with gross vehicle weight
exceeding
5 tonnes but not exceeding 20
tonnes from 25% to 10%
c)Motor vehicles for transport of goods with
gross weight exceeding 20 tonnes from 25% to 0%
d)Buses for the
transportation of more than
25 persons from 25% to 10%
NOTE:
The benefits will only be valid for one year. Other variations of duty also
exist e.g. on razor blades, maternity (mama) kit razors among others.
END
