18 April 2019 Uganda issues Tax Amendment Bills 2019 On 28 March 2019, Uganda's Minister of Finance Planning and Economic Development tabled Tax Amendment Bills, 2019 before Parliament for debate. Once passed into law by the Parliament and assented to by the President of the Republic of Uganda, the Bills will take effect from 1 July 2019. In general, the Amendment Bills (except the Tax Procedures Code (Amendment) Bill, 2019) have proposed to define the term "citizen" to cover a natural person who is a citizen of any East African Community (EAC) state or an East African company or a body of persons in which at least 51% of the shares are held by a citizen of any EAC state. This proposal is likely to promote cross-border trade and business across the EAC by ensuring that any tax benefits available to Uganda citizens will be available to all EAC individuals and companies. The bill seeks to define a "beneficial owner" as a natural person who owns or has a controlling interest over a legal person other than an individual, and who exercises control over the management and policies of a legal person or legal arrangement directly or indirectly whether through ownership or voting securities, by contract or otherwise. The proposal seems intended to limit the tax benefits (tax exemptions and reductions) under Uganda's tax treaties to natural persons that are tax resident in the treaty countries. The bill proposes that a person who earns rental income from more than one rental property accounts for the income, expenses and tax for each of the properties separately. The proposals will work to ensure that a taxpayer with several rental properties does not offset tax losses in one building from other buildings. The bill has proposes to alter the exemptions that were made in 2018 by exempting, for 10 years, income from letting or leasing facilities derived by developers of free zones whose investment capital is US$50 million as well as any other person carrying on business whose investment capital is US$10 million for a foreigner and US$2 million in for a citizen. The bill proposes to exclude financial institutions and insurance companies from the interest capping provisions on group companies. Currently, the interest deducted by a member of the group of companies should not to exceed 30% of the tax EBITDA.1 Where a person has carried forward tax losses for a consecutive period of seven years, it is proposed that said person pays tax at a rate of 0.5% on the gross turnover for every subsequent year it continues to carry forward tax losses. The amendment proposes withholding tax of 6% on the purchase of a business or business asset by a resident person. The bill proposes non-issuance of a license by any government body to a person without a Taxpayer Identification Number (TIN). The bill proposes a reduced tax rate of 10% on government securities whose maturity period is at least 10 years. The bill proposes to reduce the advance withholding VAT rate from 18% to 6% of the taxable value. The bill also proposes to exempt compliant taxable persons from withholding VAT.
The bill proposes registration of importers, manufacturers and providers of excisable goods and services and their corresponding premises, failure of which will attract a fine of UGX400,000 (US$110) for each day of default.
The bill proposes removal of any interest or fine due from a person who has committed an offense under a tax law and voluntarily discloses the commission of the offense to the Commissioner, and agrees to pay the outstanding taxes. The bill proposes payment of 5% of the principal tax or duty recovered to a person who provides information leading to the recovery of a tax or duty of 5%. This is a reduction from the current 10%. For clarity, the bill stipulates the tax returns to be filed with the Commissioner General. These are: Valued Added Tax; Income Tax; Withholding tax; Excise Duty; Tax returns under section 50 of the Lotteries and Gaming Act, 2016; and Stamp duty.
Document ID: 2019-0796 |
