Tax policy is a key element of the investor’s consideration for allocating capital to a venture in any target jurisdiction. For example, generous tax incentives as well as low corporate income tax rates may positively influence the choices investors make as they select target markets for investment.

The management of a startup, therefore, must remain abreast of the evolution of tax policy and tax administration in Uganda if the enterprise is desirous of acquiring and maintaining a strategic and operational advantage. Uganda's tax policies and laws are regularly reformed to reflect the country's evolving fiscal needs. We, therefore, highlight a few notable developments.

Uganda levies a value-added tax rate of 18% on goods and services prescribed under the Value-Added Services Act. The VAT law also contains a list of zero-rated supplies. Investors are encouraged to visit the Uganda Revenue Authority (URA) website for the latest amendments to the VAT law. There haven’t been any significant trends towards amending corporate income tax (CIT) rates in Uganda. Both residents and non-resident persons pay CIT at 30% per annum. Income tax for resident companies with an annual turnover of between UGX 50 million and UGX 150 million (~US$ 13,500 to US$ 40,000) is determined by rate of turnover or a fixed amount, subject to availability of accounting records. For smaller businesses whose earnings fall between UGX 10 million and UGX 50 million (US$ 2,700 and US$ 13,500), fixed and varying rates of income tax will apply.

The trend in tax policy has been toward excisable "electronic services.” For example, Uganda levies an excise tax on telephone airtime. The Uganda tax amendment bill (2018) broadened the definition of excisable "electronic services" to include websites, web-hosting or remote maintenance of programs and equipment, software, images, texts and information, access to databases, self-education packages, music, films, games of chances, political, cultural, artistic, sporting, scientific and other broadcasts.  The same tax amendment established the over-the-top (OTT) tax, which is negatively impacting the use of social media platforms and mobile money services by most accounts.

Uganda has signed and ratified 9 double taxation agreements with Denmark, India, Italy, Mauritius, the Netherlands, Norway, South Africa, the United Kingdom and Zambia. Uganda no longer has thin capitalisation rules. Interest deductibility is limited based on tax earnings before interest, taxes, depreciation, and amortization (EBITDA). Also, Uganda does not have a controlled-foreign companies (CFC) regime. A CFC is a corporate entity that is registered and conducts business in a different jurisdiction or country than the residency of the controlling owners.

Withholding Tax Rates on Dividends, Interest, Royalties et al.

WHT (%)

As already highlighted in the previous sections, investors are encouraged to design and adapt their business models to reflect the changing nature of Ugandan tax laws and policies. Investors are also required to register with the Uganda Revenue Authority Electronic Fiscal Receipting and Invoicing System (EFRIS) at https://www.ura.go.ug/