Uganda
Notes: 1. Payments of dividends and interest are subject to a WHT of 15% both for residents and non-residents. In the case of non-residents, the rate may be reduced under an applicable tax treaty. The rate of WHT for dividends paid to resident individuals from listed companies is 10%. 2. In addition, non-residents are subject to 15% WHT for royalties, management fees, entertainers and sports personnel income, natural resource payments and equipment leases, on income earned from Uganda. 3. Interest paid to a resident person is subject to WHT at the rate of 15%. This is not, however, applicable in the case of: • Interest paid by a natural person. • Interest paid to a financial institution. • Interest paid by a company to an associated company. • Interest paid which is exempt in the hands of the recipient. 4. Any payment to a person in Uganda from the Government, a government institution, a local authority, any company controlled by the Government or any person designated in a notice issued by the Finance Minister of an amount exceeding UShs1 million for the supply of goods or materials of any kinds or any service, is subject to a 6% WHT. 5. The Commissioner can exempt resident tax payers who are regularly compliant from the payment of the 6% WHT on goods and services.
Double Taxation Agreements (DTAs) Uganda has DTAs with a number of countries including, South Africa, United Kingdom, Mauritius, Zambia, Italy, Norway, Denmark, India and Mauritius. The East African Treaty has also been signed but is yet to be ratified.
The Income Tax Act provides that an international agreement entered into between the Uganda Government and the government of a foreign country shall have effect as if the agreement was contained in the Act. Where the terms of such an agreement are inconsistent with the provisions of the Income Tax Act, apart from issues of tax avoidance, the terms of the international agreement prevail over the provisions of the Income Tax Act. Capital Gains Tax (CGT) Taxable capital gains arise on the disposal of qualifying assets held by a company. The gain is the excess of proceeds over the cost of the assets and related expenses. The taxpayer can elect to claim inflation relief for assets acquired prior to 31 March 1998. The gain is taxed at the company rate as part of business income. For an involuntary disposal, there is no gain or loss where the proceeds are re-invested in similar assets within one year. An asset is treated as disposed of, if it is sold, exchanged, redeemed or distributed by the taxpayer, gifted, destroyed or lost. Non-business assets are not subject to CGT except gains derived from the sale of shares in a private limited liability company. Only gains on disposal of business assets are liable to capital gains. No gain or loss arises on a transfer between spouses, transfers which form part of a divorce settlement, disposals where the proceeds are reinvested in a similar asset within one year of the disposal, and transfer of asset to a trustee or a beneficiary on death of the taxpayer. Transfer Pricing In the past there have been no specific transfer pricing rules in Uganda. However, the Income Tax Act gives the Commissioner powers to recharacterise income or transactions between related parties using the anti-avoidance provisions, where the Commissioner is of the opinion that the transactions do not reflect on arm’s length relationship. Transfer pricing regulations have now been gazetted and became effective from 1 July 2011. Previous
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