Category Archives: TAX LEGISLATION

KRA Vs Sendy: Kenya’s High Court VAT Precedent Threatens East Africa’s Gig Economy and Digital Commerce Growth.

Kenya’s High Court has recently delivered a Key decision in the battle over VAT in the ride-hailing/digital platform economy, that risks far-reaching ripple effects across East Africa’s digital commerce landscape. 

The landmark decision fundamentally reclassifies digital platforms as primary suppliers of gig-economy services for VAT purposes. This brings them fully into the VAT net and forces gig workers/entrepreneurs and small merchants into VAT compliance, with potentially far-reaching consequences for the growth, structure, and taxation of the East African digital economy.

The immediate tax implication is that we now have two VATable transactions in every ride or delivery processed through a digital platform operating a similar business model. These are;

Supply from motor vehicle owner to tech platform (input VAT for the platform)

Supply from tech platform to end consumer (output VAT to the tax authorities on full final consideration paid by the end consumer)

This new reality is problematic from a commercial point of view, taking into consideration the nature and level of tax sophistication of most African economies.

The other immediate implication is that thousands of gig-economy participants have been hit with a VAT compliance shock overnight, and the reason is simple; e-commerce platforms lose input VAT if they trade with non-compliant taxpayers. Exposure to commercial activities of too many Non-VAT Traders or informal taxpayers makes the platform’s business model commercially unviable and wipes out margins.

Uganda’s Tax Exemption for Start-Ups: Key Insights for Entrepreneurs.

This fiscal year’s tax amendments included certain key amendments that have been hailed as a critical step in the right direction for tax administration, and particularly the tax exemptions provisions targeting start-ups and similar fledgling businesses.

​The amendment introduced new tax law aimed at fostering and supporting well formalised entrepreneurship, in the form of an income tax exemption for Uganda Citizen owned businesses started after 1st July 2025, for three-years.

Its practical application however requires a precise understanding of how the Uganda Revenue Authority (URA) interprets “new business,”, “associated entities,” and “Compliance” among other tax nomenclature. Yes, as with all incentives, the opportunity lies in the detail. This article seeks to address this detail.

Investing in Uganda; Tax Planning and Why Tax Should Lead Your Market Entry Strategy

The decision on corporate structure, i.e, whether to register a subsidiary vs. branch, Financing questions, i.e debt vs. equity, tax residence/domicile/location of holding entities are all strategy questions which are informed by tax considerations. 

Choosing the wrong structure can expose the investor to; Transfer pricing risk, Withholding tax inefficiencies, Loss of treaty benefits, Double taxation and generally, tax inefficiency and a higher tax burden across different tax heads.

But what happens when the company is set up in a way that causes preventable tax leakages or unnecessary friction with the tax authorities?

For any foreign investor entering the Ugandan market, undertaking corporate legal structuring advice without any input from a tax practitioner is a grave mistake.

While the structure may be viable on paper, it might ignore certain critical elements of transfer pricing regulation, international tax treaty benefits and domestic tax compliance aspects that might later work against the investor and require a costly restructuring process.

2025 TAX AMENDMENTS; PROPOSED STAMP DUTY AMENDMENTS DO NOT CURE DEFECTS IN THE LAW

The Minister proposes an amendment to Schedule 2 to the Stamp Duty Act, to provide for nil duty for an agreement or memorandum of agreement executed or received in Uganda.

I need to warn at this point that Taxpayers better not celebrate just yet. This is because, the proposed amendment if passed into law might not in fact take away this liability. The Stamp Duty Act as it currently stands is littered with overlapping levies and one of these is the one the Minister proposes to do away with.

The tax sought to be done away with might still be brought home to a taxpayer by enforcing another provision. That other provision happens to be item 52 of Schedule 2 of the Stamp Duty Act, which levies Stamp Duty of a similar amount(Shs. 15000/=) on a RECEIPT as defined by section 2, for any money or other property the amount of value of which exceeds Shs. 50000 /=.

Section 2 of the Act defines the RECEIPT as follows;

“RECEIPT” includes a note, memorandum or writing whether the note, memorandum or writing is or is not signed with the name of a person,

(a) by which any money, or any bill of exchange, cheque or promissory note is acknowledged to have been received;

(b) by which any other movable property is acknowledged to have been received in satisfaction of a debt;

(c) by which a debt or demand, or any part of a debt or demand, is acknowledged to have been satisfied or discharged; or

(d) which signifies or imports the acknowledgment;

The definition of a receipt under that Section is so wide that it in fact includes and indeed refers to what essentially is an agreement and a Memorandum of an agreement.

DIGITAL SERVICES TAX IN UGANDA: KEY INSIGHTS

Whereas certain companies, especially the large digital companies like Amazon, Microsoft and Google etc may or already procured registration with the URA for purposes of compliance under this law owing to their lucrative business to business contracts with large resident companies like banks and telecos, there are still countless transactions falling under this tax head from smaller firms which don’t sell as much into our market or which mostly deal with retail customers but who will simply choose not to register with URA and with the likely consequence that the consumers end up meeting this tax burden. The most obvious examples are the many audio streaming services and even social media platforms like facebook, which still makes money from Uganda even when it’s officially blocked. 

TAX JUSTICE AND EQUITY; GOVERNMENT’S OBLIGATIONS TO TAXPAYERS.

URA ought to make reasonable accommodations for all taxpayers, recognizing that small taxpayers, in particular, may face challenges in understanding and complying with tax obligations due to limited resources and expertise. This includes providing simplified guidance, offering assistance programs, and ensuring that tax information is accessible and understandable.

Both large and small taxpayers who make genuine efforts to comply with tax laws should be treated fairly by URA. However, URA may need to exercise greater leniency and understanding towards small taxpayers who may lack the resources to fully comprehend complex tax requirements.

INCOME TAX(AMENDMENT) BILL 2024: THE LIKELIHOOD OF DOUBLE TAXATION OF REAL ESTATE AND OTHER LEGISLATIVE CONSIDERATIONS TO NOTE.

My other observation is that the tax is likely to deflate the real estate industry since a lot of retirement and savings assets are channeled into the sector and might escalate the housing deficit in urban centers even further. This new taxhead is also likely to have the negative implication of wiping out savings of the many investment club groups who buy land and hold for future development.

The proposed law is attempting to upset the known principles of taxation and the structure of the Income Tax Act, by applying capital gains taxation rules to what essentially are revenue trades. This may later backfire by creating tax avoidance and aggressive tax planning loopholes in the Income Tax Act for well advised businessmen to exploit and curve tax obligations altogether, and I believe this will be a consequence of this proposed law.

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.

INCOME TAX(AMENDMENT) BILL 2023, MORE AGGRESSIVE TAXATION OF THE REAL ESTATE SECTOR MAY BE COMING.

Under the Act, ‘tax is imposed on a person who has chargeable income for the year of income’. And so there must be income to begin with and yet this amendment seeks to tax both gains and losses, or rather even when it’s obvious that there’s no income to tax.