The Income Tax Act Cap.340 4 - Uganda Investment …

1 The Income Tax TaxLawsUganda-1-PrefaceThis Handbook containingan up-to-date reproduction ofUganda sprincipaltaxlaws is intended for use by TaxAdministrators, TaxPractitioners, Taxpayers,Studentsand any interested tax legislation coveredin this Income Tax Act(ITA), , as amended; Value Added Tax Act(VATA), , as amended; Legislationand Legal NoticesundertheIncomeTaxActandtheValueAd dedTaxAct; Notes undertheITA and VATA issued by theCommissioner General of the Uganda Revenue Authority; Instrumentsunder the Gaming and Pool Betting(Control and Taxation) Act, ; East African Community Double Taxation Agreement; listing of Uganda s Double Taxation Agreements; from the Finance Acts& Fees under variousEnactments; reviewing thisupdatedversion, the Reprint of the Income Tax Actand the Value Added Tax Act [as at 19thOctober 2012]

2 By theUgandaLaw Reform Commissionwas usedas an authenticreference reprint consolidates the Income Tax Act, Cap 340,the Value Added Tax Act, Cap 349 and Statutory Instruments madethereunder since the revised edition of the laws of Tax LawsUganda-1-DisclaimerThis reproduction of Uganda s tax legislation is the personal effort ofthe undersigned in his capacity as a former employee of UgandaRevenue Authority, and now a Tax and Legal Consultant withONYANGO & COMPANY Handbookis neither prepared by Order of the Government ofUganda nor does itpurport, if printed, to have been printed by theGovernment Printer or by or under the authority ofthe AttorneyGeneral orParliament,and cannot therefore,under anycircumstances,be a substitute for a Publication by the Government person, who chooses to rely on this handbook for any purpose,including legal proceedings, is responsible for ensuring its accuracy,novelty and completeness byconducting anindependentverificationwith the principal laws of Uganda asenacted by Parliament and/orpublished by the Uganda Law Reform Commission.

3 The Governmentof Uganda or the Undersigned shall not be held liable for anymisrepresentations arising out of its theevent that you encounter anyerrors ofomission orcommissionwhile making reference to this Handbook, kindly notify theundersignedfor GOD AND MY COUNTRYJ oseph O. OkujaT|+256 (0) 750 333 800 | 717 440 129 | 776 440 120 |E Tax LawsUganda-2-(This page has intentionally been left blank) Income Tax TAX ACTCap. 340- laws of Uganda2000An Act to consolidate and amend the law relating to Income taxandfor other connected : 1stJuly 1997 Arrangement of SectionsPART I of the II IMPOSITION OF tax tax imposedRates of of tax for of Income tax for of Income tax for trustees and retirement fundsPART III RESIDENTS AND retirement personIncome Tax IV CHARGEABLE Income arising from insurance incomeExempt of deriving.

4 Refreshment and entertainment and minor capital of intangible research of forward lossesPART V TAX ACCOUNTING year of of Tax of obligations with discount or currency debt gains and lossesPART VI GAINS AND LOSSES ON DISPOSAL OF of Part and losses on disposal of rules for consideration recognition of gain or lossPART VII MISCELLANEOUS RULES FOR DETERMININGCHARGEABLE of joint methods of allocating costs and payments and of doctrine of expenditurePART VIII PERSONS ASSESSABLET axation of of splittingTaxation ofPartnerships and of taxation of of partnership Income or of partnersIncome Tax , reconstitution or dissolution of a base of partner s interestTaxation of Trusts and of provisions relating to taxation of trusts of of trustees and of estates of deceased personsTaxation of Companies and of taxationfor in control of reliefPART IX INTERNATIONAL of Part of employment tax of branch on international on payments to non-resident public entertainers or on payments to non-resident contractors or of non-residents providing shipping, air transport,ortelecommunications provisions relatingto taxes imposed underSections83, 84, 85, & capitalisationIncome Tax IXA SPECIAL PROVISIONS FOR THE TAXATION OF[MINING]

5 Ofmining relating to mining exploration extraction expenditurePetroleum of petroleum of deductionsrelating to petroleum exploration development expenditureCommon Rules applicable to Mining and Petroleum transfers of of accounting of costs and ring measurementof 111 to 113 of the Act and the TaxProceduresCode , objections and and , definition and allocation of costs andexpendituresIncome Tax furnish or misleading tax and tax Commissioner to undertake auditPART X between of Income and deductionsPART XI PROCEDURE RELATING TO Income of return of where return of Income not of time to furnish a return of provisions in relation to assessmentsObjections and to totheHigh Court ora tax to the Court of of proofCollection and Recovery of date for payment of as a debt due to the Government of of tax from persons leaving Uganda of tax from persons owing money to the of tax by from agent of non-residentIncome Tax of on property for unpaid taxProvisional of provisional tax payableRefund of XII PROCEDURE RELATING TO RENTAL taxPART XIII WITHHOLDING OF TAX of Part of tax by of interest to resident

6 Of dividends to resident tax from professional oftax by the purchaser of an for winnings of sportsbetting and pool Tax on Payments of Re-Insurance for goods and services as a final of tax to withhold credit of payments and tax of tax on assessment and withholding agent sindemnityIncome Tax XIV RECORDS AND INFORMATION and information to books, records and to obtain information or and records not in the English languageTax Clearance clearance certificateTax Identification identification numberPART XV OFFENCES AND on unpaid taxOffences and to furnish a to comply with recovery to maintain proper to comply withsections 121, 129, 130, 131, 132 use of tax false or misleading an officer of the and by and relating to officers and persons employed tocarry out this Act; by may appear on behalf of of charged to be paid notwithstandingprosecutionIncome Tax tax for failure to furnish a return of tax in relation to tax in relation to false or misleading tax for understating provisional tax of penal taxPART XVI and and notices.

7 Authentication of of information of of notices and other rulingsRemission of of taxPART XVII of Part of monetary amounts and Tax ScheduleListed institutionsSecond ScheduleSmall business taxpayers tax ratesThird ScheduleRates of taxFourth ScheduleChargeable Income arising from short-terminsurance businessFifth ScheduleValuation of benefitsSixth ScheduleDepreciation rates and vehicle depreciationceilingSeventh ScheduleCurrency pointEighth ScheduleClassification, definition and allocation ofcosts and expenditure[Petroleum and Gas]SUBSIDIARY LEGISLATION(Regulations& Notices)The Income Tax (Withholding Tax) Regulations, 2000 The Income Tax (Distraint) Rules, 2000 The Income Tax (Approved Industrial Buildings) Regulations,2003 The Income Tax (Tax Incentives for Exporters of FinishedConsumerand Capital Goods)Regulations, 2009 The Income Tax (Transfer Pricing) Regulations, 2011 The Income Tax (Designation of Payers) Notice, 2013 Practice Notes by URAI ncome Tax I of the ActThis Act applies to years of Income commencing onor after 1stJuly, this Act, unless the context otherwise requires (a) amateur sporting association means an association whosesole or main object is to foster or control any athletic sport orgame and whose members consist onlyof amateur sportspersons or affiliated associations, the members of which consistonly of amateur sports persons;(b) approved means approved by the Minister under regulationsmade underSection164.

8 (c) assessed loss has the meaning inSection38;(d) assessment means (i)the ascertainment of the chargeable Income of, and theamount of tax payable on it, by a taxpayer for a year ofincome under this Act, including a deemed assessmentunderSection96;(ii)the ascertainment of the rental Income of, and the amountof tax payable on it by an individual for a year of incomeunder this Act;(iii)the ascertainment of the amount of penal tax payable by aperson under this Act; or(iv)any decision of theCommissionerwhich, under this Act,is subject to objection and appeal;(e) associate has the meaning inSection3; Income Tax (f) building society means a building society registered under theBuilding Societies Act;(g) business includesany trade, profession, vocationor adventurein the nature of trade, but does not include employment;(h) business asset means an asset which is used or held ready foruse in a business, and includes any asset held for sale in abusiness and any asset of a partnership or company;(i) business debt means (i)in the case of a debtor (A)a debt obligation, the proceeds of which are used toacquire a business asset or to incur an expense of abusiness;(B)a debt obligation arising, as a result of being giventime to pay, on the acquisition of a business asset orthe incurring of an expense of a business; or(C)any debtobligation of a partnership or company.

9 Or(ii)in the case of a creditor, any debt obligation owed to thecreditor that was entered into or arose in the course of thecreditor s business;(j) business Income has the meaning inSection18;(k) chargeable Income has the meaning inSection15;(l) chargeable trust Income has the meaning inSection70;(la) Collective Investment Scheme hasthe meaning assigned to itbySection3 of the Collective Investment Schemes Act.(m) Commissioner means theCommissionerGeneral appointedunder the Uganda Revenue AuthorityAct;Inserted byIT (Am) Act 2005 Income Tax (n) company means a body of persons corporate orunincorporated, whether created or recognised under the law inforce in Uganda or elsewhere, and a unit trust, but does notinclude any other trust or a partnership;(o) cost base , in relation to an asset, has the meaning inSection52;(p) court means a court of competent jurisdiction;(q) currency point represents the amount in UgandaShillingsprescribed in the SeventhSchedule to this Act;(r) debenture includes any debenture stock, mortgage, mortgagestock, loan, loan stockor any similar instrument acknowledgingindebtedness, whethersecured orunsecured.

10 (s) debt obligation means an obligation to make a repayment ofmoney to another person, including accounts payable and theobligations arising under promissory notes, bills of exchangeand bonds;(t) dependant , in relation to a member of a retirement fund,means a spouse of the member, any child, including an adoptedchild of the member who is under the age of eighteen years, orany other relative of the member who theCommissionerissatisfied relies on the member for support;(u) depreciable asset means any plant or machinery, or anyimplement, utensilor similar article, which is wholly or partlyused, or held ready for use, by a person in the production ofincome included in gross Income and which is likely to losevalue because of wear and tear, or obsolescence;(v) disposal has the meaning inSection51;(w) dividend includes (i)where a company issues debentures or redeemablepreference shares to a shareholder Income Tax (A)in respect of which the shareholder gave noconsideration, an amount equal to the greater of thenominal or redeemable value of the debentures orshares.