The commercial advantages of being exempt include better cash flow and working capital management; Exempt businesses easily avoid financial distress by taking some relief from the harshness of having to pay tax before it’s due; that is to say, before the obligation to file a final return and account for income tax, arises; which for non-individuals is 6 months after the end of the tax year.
Category Archives: INCOME TAX
Income Tax(Amendment) Act 2023: Repeal of investment incentives could hamper industrialization and job creation efforts.
The government of Uganda grants fiscal incentives to qualifying investors to promote both domestic and foreign investment. These incentives focus on industrialization with the objective of job creation, value addition to local raw materials, export promotion, and promotion of tourism, among others. These include incentives for investments located in industrial parks or free zones and establishment of new factories. For investors who are able to take the full advantage of all incentives for which they qualify under the different heads, they are able to minimise their chargeable income and consequently minimise tax liabilities in the short and long term.
The informal sector and URA’s struggles with widening the tax base.
“Trading through companies is much more technical and with recent increased enforcement from the regulators, this means entities can no-longer get away with non-compliance as has been the case, and yet tiny businesses can’t absorb the steep compliance costs (both with URA and URSB).
I have in the past advised owners of tiny enterprises to stick to sole proprietorship or partnerships as business vehicles until it becomes absolutely necessary to incorporate, in which case those businesses can be sold to corporations in consideration for equity.”