from 1 July 2023, the initial allowance on plant, machinery and industrial buildings was repealed. Capital allowances for industrial buildings and certain commercial buildings are permitted on a straight-line basis over 20 years.
Effective from 1 July 2021, the following is the reclassification of depreciable assets.
Class Assets
2 Plant and machinery used in farming, manufacturing and mining
3 Automobiles; buses, minibuses, goods vehicles, construction and earth moving equipment, specialized trucks, tractors, trailers and trailermounted containers, rail cars, locomotives and equipment, vessels, barges, tugs, and similar water transportation equipment, aircraft, specialized public utility plant, equipment, and machinery, office furniture, fixtures and equipment, and any depreciable asset not included in another class 20
Rates. The resident individual tax rates are set forth in the following table. These rates apply to employment income and taxable business income.
For nonresidents, taxable income, including investment income, is taxed at the rates in the following table.
The amount of tax payable is reduced by tax withheld.
Withholding tax. The Income Tax Act Cap 340 specifies persons who are required to withhold tax as well as those on whom the tax should be imposed, depending on the nature of transaction. This tax is deducted at source by a withholding agent on making the payment to another person.
A withholding tax agent is the person who makes the payment and is required to withhold tax; the recipient of the payment is the payee.
If a taxpayer is designated by the minister to withhold tax, and the payer pays an amount or amounts in aggregate exceeding UGX1 million for a supply of goods and services, the payer withholds tax at a rate of 6% on local payments. If a taxpayer is not a designated withholding tax agent, the payer withholds tax only on payments made with respect to professional services and management fees. For international payments, tax is withheld at a rate of 15%. However, for countries that have double tax treaties with Uganda, the rate at which tax is withheld varies per country.
International transportation of goods or passengers. No withholding tax is due on income derived by a nonresident from transportation of goods, passengers or mail not embarked in Uganda as the income does not arise from sources in Uganda.
Relief for losses. Losses may be carried forward to be offset against future profits. Effective from 1 July 2023, a taxpayer carries forward assessed losses for seven years shall only be allowed a deduction of 50% of the loss carried forward at the beginning of the following year of income and the subsequent years. In general, losses may not be carried back. However, with respect to long-term contracts, a loss in the final year of the contract can be carried backward to offset reported tax profits of previous years.
A long-term contract is a contract for manufacturing, installation, or construction or for the performance of services related to such activities, if not completed within the year of income in which work under the contract commenced, excluding a contract estimated to be completed within six months of the date on which work under the contract commenced.
B. Other taxes
Value-added tax. Uganda imposes value-added tax (VAT) on the sale or import of taxable goods and services. Supplies of services or goods may be exempt, zero rated (subject to a VAT rate of 0%) or standard rated. The standard VAT rate is 18% on the gross amount paid. Exempt goods or services are neither zero rated nor subject to the rate of 18%. They include supplies of livestock, unprocessed foods, financial services and other items listed in the second schedule of the VAT Act. Zero-rated goods or services include exports, international transport, and drugs and medicines manufactured in Uganda.
The VAT payable on a taxable supply made to a government ministry, department or agency by a contractor executing an aidfunded project is deemed to have been paid by that ministry, department or agency if the supply is solely and exclusively for the use of the aid-funded project. A credit for input tax is allowed if a person is dealing in standard and zero-rated goods.
The Electronic Fiscal Receipting and Invoicing System (EFRIS) to handle e-invoicing and e-receipting is mandatory, effective from 1 January 2021. All VAT-registered taxpayers are required to configure this system into their businesses depending on the preferred channel. Taxpayers are not able to claim a deduction
Uganda must obtain student passes from designated immigration offices. These passes are issued at no cost.
Special passes are issued to foreign nationals wishing to work in Uganda on a short-term assignment (three to five months). A special pass is valid for three months and may be extended once.
Visitors’ passes are issued on entry into Uganda. They are valid for three months and may be extended for up to six months.
Transit passes are normally valid for seven days.
Prohibited immigrant passes are issued to foreign nationals who, under normal circumstances, would not be granted visas. They are granted only in special cases and are valid for seven days.
When applying for passes, applicants must have valid passports or equivalent travel documents. No quota system exists for immigration purposes in Uganda.
G. Work permits and self-employment
Only special passes and work permits allow foreign nationals to undertake employment in Uganda.
Temporary work permits, called special passes, are valid for three months and may be extended for up to a maximum of three months.
A work permit or entry permit is issued for up to three years and may be renewed every three years. Work permits are divided into eight classes (Classes A through H), which are summarized below. To obtain each of the work permits, specified documents must be submitted.
Class A work permits are issued to foreign diplomats.
Class A official work permits are issued to holders of official passports and employees of organizations exempted from the payment of immigration fees.
Class A2 work permits are issued to a person employed in a government institution and paid by the government of Uganda.
Class B work permits are issued to investors in agribusiness.
Class C1 work permits are issued to investors prospecting for minerals.
Class C2 work permits are issued to shareholders of companies engaged in prospecting of minerals or mining of specific minerals (gold, copper, iron ore, silica, phosphate, limestone and marble).
Class D work permits pertain to general business or the retail trade.
Class E work permits are issued to manufacturers.
Class F work permits are issued to shareholders of companies engaged in specified professions (medical professionals, dentists, legal professionals, pharmacists, civil engineers, mechanical engineers, electrical engineers, mining engineers, aeronautical engineers, chemical engineers, accountants, architects and
surveyors, veterinary surgeons, estate agents, valuers, land surveyors and land agents, nurses, and midwives).
Class G work permits has three sub-classifications of work permits, which are Class G1 , G2 and G3. They are issued to employees.
Class G1 work permits are issued to missionaries and volunteers for nongovernmental organizations (NGOs).
Class G2 work permits are issued to foreign expatriates employed in Uganda, including salaried employees working for NGOs.
G3 work permits are issued to rare skilled foreign nationals employed in agro-processing, manufacturing and mining of selected minerals.
Class H work permits are issued to persons who have an assured income derived from sources outside and undertakes not to accept employment of any kind.
The flow of the immigration process is adjusted, effective from 1 July 2016. The following is the flow of the process:
• The company must register and obtain an organization code so that all assignees apply under the company’s account (the requirements for obtaining an organization code include filling out the Imm001 form and then attaching the company documentation under each class on a CD, which is shared with the immigration department).
• After the company obtains an organization code, the applicant must fill out the permit application form online.
• The applicant is then prompted to upload the required documents as per the type of permit.
• The application is then submitted, and follow-ups can be made based on the application identification number, passport number and date of birth.
• An approval letter is sent by email or downloaded through the Uganda electronic visa/permit website. This letter establishes that the applicant is eligible for the approved visa or permit, but it does not establish that the application is definitely approved.
• The final approval is issued at the selected point of entry (in the case of a visa) or at the immigration office headquarters where the visa or permit sticker is printed and pasted on the passport.
Payment of the government fees is due after approval has been received.
After all documents are received, it takes from three to four weeks to process a work permit. All passes (special passes, dependent passes and student passes) usually take one to two weeks to be approved.
As a result of the introduction of the organization code, nonresidents seeking permits are not required to present company documentation (for example, articles and memorandum of association), because they are applying for a permit under an organization’s account that was issued an organization code on presentation of the necessary documentation mentioned above.
Foreign nationals may change employers after they have obtained work permits. However, they must apply for new work permits under their new employers.