Uganda has a residence-based tax system in terms of which residents are subject to tax on their world-wide income, whereas non-residents are subject to tax only on their Ugandan-sourced income.
A company is resident in Uganda if it:
- is incorporated or formed under the laws of Uganda;
- has management and control exercised in Uganda at any time during the year of income; or
- undertakes the majority of its operations in Uganda during the year of income.
corporate tax rate
Resident companies and permanent establishments of foreign companies are subject to corporate income tax at the rate of 30%.
The amount of tax payable by a small business (annual turnover or income that does not exceed UGX150-million) depends on the business’ turnover.
The 2018 Income Tax Amendment Act introduced a minimum tax at the rate of 0.5% on the gross turnover of taxpayers who have been in a loss position for 7 consecutive years of assessment.
|capital gains tax (“CGT”)|
Capital gains on the disposal of assets are included in ordinary taxable income and are subject to corporate income tax at the standard rate of 30%.
withholding tax (“WHT”) rates
WHT rate (%)
|dividends||0% (if at least 25% voting rights)|
20% (on government securities)
20% (on government securities)
|management, consulting and technical services fees||6% (unless listed as exempt entity)|| 15%|
double tax agreements (“DTAs”)
DTAs are in force with Denmark, India, Italy, Mauritius, the Netherlands, Norway, South Africa, the United Kingdom and Zambia.
Losses may be carried forward indefinitely.
Losses on foreign-source income cannot be set off against domestic income.
In terms of Ugandan’s transfer pricing rules, transactions between associates (related parties) must be entered into on an arm’s length basis.
Where any person acts, or is likely to act, in accordance with the directions, requests, suggestions or wishes of another person, whether or not these are communicated to the first-mentioned person, the two persons will be treated as associates of each other.
A company is an associate of another person if that person, either alone or together with an associate or associates, controls 50% or more of the voting power in the company, either directly or through one or more interposed companies, partnerships or trusts.
The 2018 Income Tax Amendment Act repealed and replaced the thin capitalisation rules as follows:
- interest that can be claimed as a deduction by a company that is part of a group is restricted to 30% of the taxable earnings before interest, tax, depreciation and amortisation; and
- a taxpayer whose interest exceeds the limit may carry forward the excess interest for not more than three years.
The income tax rates applicable to resident individuals, effective 1 July 2012, are:
|annual chareable income of residents (UGX)||tax rate |
|up to 2 820 000|| 0%|
|2 820 001-4 020 000|| 10%|
|4 020 001-4 920 000|| 20%|
|4 920 001-120 000 000|| 30%|
|above 120 000 000|| 40%|
Both employees and employers employing five or more employees must make monhtly social security contributions to the NSSF.
The employer contribution rate is 10% of the employee’s monthly wage, whereas the employee contribution rate is 5%.
Subject to the approval of the NSSF, expatriates are not obliged to contribute to NSSF if they are not ordinarily resident in Uganda and are to be employed in Uganda for a continuous period of not more than three years or such longer period as is allowed by the NSSF.
There is no payroll tax in Uganda.
However, all employees in gainful employment are liable to pay a local service tax ranging from UGX5,000 to UGX100,000 per month, depending on the monthly income earned by such employee.
|stamp duty |
Stamp duty is levied under the Stamp Duty Act on a wide range of instruments and documents, either ad valorem at the rate of 1% or 0.5% or at a flat rate of UGX10 000, depending on the nature of the instrument
Stamp duty at a rate of 1.5% is payable on the transfer of shares in a Ugandan company and immovable property.
|taxable supplies |
VAT is levied on the supply of goods and services in Uganda and on the importation of goods and services.
A person whose taxable turnover:
- during any period of three calendar months exceeds or is expected to exceed a quarter of the annual registration threshold of UGX150-million must register for VAT purposes.
The annual registration threshold is currently UGX150-million.
|reverse VAT on imported services|
Resident companies are required to account for output VAT in respect of imported services rendered by non-resident companies in terms of a reverse charge mechanism. Such VAT is generally not allowed as an input credit.