The tax amendments for Uganda in 2024 reflect several changes introduced in the Finance Act 2023, which came into effect on July 1, 2023. These amendments aimed to improve tax compliance, widen the tax base, and address evolving economic conditions. Below are the key highlights of the Uganda tax amendments for 2024:
Digital Economy Taxation: Expands the definition of business income to include income derived from online services. This targets global digital service providers, requiring them to register for and remit tax on income earned from Ugandan users.
Rental Income Taxation: The withholding tax on rental income is set at 15%. This includes income earned from properties and enforces tax compliance from landlords.
Tax Deductibility: Clarification on the deductibility of interest payments on loans, allowing deductions on loans used to finance income-generating activities, capped at 30% of the borrower’s earnings before interest, tax, depreciation, and amortization (EBITDA).
Presumptive Tax Regime: The threshold for presumptive taxes for small businesses has been raised to expand the scope of taxpayers under the regime, easing compliance for small enterprises.
VAT on Imported Services: Non-resident digital service providers are now required to charge VAT on electronic services provided to Ugandan customers, including streaming services, online gaming, and digital advertising.
VAT Refunds: The law now allows faster processing of VAT refund claims, reducing the waiting period for refunds to businesses, especially exporters.
Exemptions and Zero-Rating:
– VAT exemptions on certain agricultural supplies to encourage investment in the agricultural sector.
– Zero-rating on supplies related to renewable energy sources and inputs used in the manufacture of medicines and medical equipment.
Excise Duty on Digital Transactions: Increased excise duty on mobile money withdrawals and bank-to-mobile transactions. The rate was raised from 0.5% to 0.9%, reflecting efforts to raise revenue from the increasing use of mobile money.
Alcohol and Tobacco: The excise duty on locally manufactured and imported alcoholic beverages, as well as tobacco products, was increased by 10%, aimed at generating additional revenue and promoting public health.
Fuel and Lubricants: Excise duty on fuel (petrol and diesel) was raised to mitigate rising inflationary pressures and boost revenue for infrastructure development projects.
Increase in Stamp Duty Rates: Higher stamp duty rates on specific legal documents, including leases, mortgages, and transfers of property. This is intended to streamline stamp duty administration and improve revenue collection.
Stamp Duty on Insurance Policies: New provisions introduced a modest stamp duty on various types of insurance policies, with the aim of broadening the tax base within the insurance sector.
Electronic Fiscal Receipting and Invoicing System (EFRIS): The Uganda Revenue Authority (URA) has expanded the mandatory use of the EFRIS system to capture all business transactions for VAT-registered taxpayers. This aims to reduce tax evasion through proper record-keeping and real-time monitoring.
Withholding Tax: Introduction of withholding tax obligations for new sectors and entities, including those involved in digital services, increasing tax collection efficiency.
Transfer Pricing Rules: Strengthened transfer pricing regulations to prevent tax avoidance by multinational companies. The amendments clarify reporting obligations for entities engaged in related-party transactions.
Higher Tax Bands for High Earners: PAYE tax brackets were adjusted, with increased tax rates for higher income earners (individuals earning over UGX 10 million per month). This was introduced to make the taxation system more progressive and equitable.
Investment in Special Economic Zones (SEZs): Extended tax holidays and duty exemptions for investors setting up operations in SEZs, particularly in the manufacturing, agro-processing, and ICT sectors.
Tax Relief for Startups: Reduced corporate income tax for startups in the technology and innovation sectors for the first three years of operation.
These 2024 amendments reflect Uganda’s continued efforts to modernize its tax regime, promote compliance, and ensure revenue growth in line with its economic development goals.
