Leveraging your business to pay taxes through loans might create a situation where you trade one liability for another with more adverse commercial implications, bearing in mind that whereas tax due attracts interest at minimal rates(2%), commercial banks lend at much higher rates(above 15%).
Tag Archives: corporate governance
THE MRT TAX AND GOVERNANCE MASTERCLASS.
The training seeks to enable participants understand the nexus between governance and taxation and highlights some of the most critical governance and management traps and lapses to avoid going forward, in order to protect businesses from taxation troubles and other commercial risk with roots in governance, while highlighting through illustrations, tax planning strategies to employ in order to keep liabilities at a minimum.
The masterclass is also aimed at equipping participants with the right knowledge needed to adapt businesses to the complexity in tax compliance introduced by changes in revenue law and taxation over the the past few years starting with the year 2020.
UGANDAN COMMERCE AND GOVERNANCE; THE IMPORTANCE OF A ROBUST ORGANISATIONAL CULTURE FROM AN EARLY STAGE.
This is the conundrum most Ugandan SMEs and young firms grapple with; Financial propriety, proper governance and risk control are neglected in the early years and this breeds a culture that later haunts the business when the operation has become too big to be ran informally.
THE MRT TAX BANKING AND FINANCIAL SERVICES TAX RISK MASTERCLASS.
This training will be most beneficial to professionals in credit risk, legal, taxation and finance roles in the banking and financial services industry but generally to all individuals with a keen interest in understanding tax risk in transactions. It’s aimed to enhance participants’ knowledge and understanding of the taxation peculiarities of banking and financial services and the transaction tax risk mitigation strategies applicable.
Participants will get to appreciate the taxation peculiarities and complexities applicable to the banker-customer relationship and tax risk that arises as a result of this special relationship. We will be discussing at length the pitfalls and tax risk apparent in the various transactions including international money transfers, mortgages and securities, finance leases among others and how it arises as well as transaction best practices to mitigate this risk.
EXPLORING THE CULTURE OF KICKBACKS IN CORPORATE KAMPALA; BUSINESSES BEING ENSNARED INTO TAX PROBLEMS.
Businesses are finding themselves trapped in a double edged sword situation, where refusing to partake in these illicit transactions means losing lucrative opportunities, while succumbing to the pressure to pay kickbacks undermines the financial integrity of transactions and creates a taxation conundrum for the business paying the kickback especially if the kickback forms a sizeable component of the transaction.So the dilemma is pay the kickback and the transaction won’t make commercial sense or don’t pay the kickback you lose the business altogether. This creates a Catch-22 for businesses, a classic case of heads you lose, tails you lose.
The repercussions of this systemic issue are far-reaching, as businesses find themselves ensnared in a struggle to account for and treat a transaction as wholly legitimate, even though a portion of it is done off record on their side(the kickback component).
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.
TAX NON-COMPLIANCE RISK IN CREDIT TRANSACTIONS: THE IMPORTANCE OF KYC TAX COMPLIANCE DUE DILIGENCE FOR FINANCIAL INSTITUTIONS.
The multifaceted nature of risk mitigation for banks means that SMEs (small and medium-sized enterprises) not only need business and risk advice, but they also require ongoing guidance to align with the constantly evolving commercial regulatory and compliance landscape in corporate governance and taxation. Without this continuous alignment, there will be a disconnect between the risk tolerance of banks and the actual realities faced by the SMEs and create a lose-lose situation for both sides.
And so SMEs need constant advice and alignment with evolving requirements to ensure that their risk profile matches the expectations of the banks they seek credit from and banks must expand their scope of KYC due diligence to include both governance and tax compliance due diligence at deal stage.
SHAREHOLDER PROCEEDINGS AGAINST DIRECTORS AND IN THE NAME OF THE COMPANY; WHEN DOES A CAUSE OF ACTION ARISE?
In a shareholder suit, remedies are sought on behalf of the company because the company itself is unwilling or unable to take action.
Such proceedings are however subject to the following cardinal rules of corporate law, to wit;
That the company being a distinct entity from its members, it has the right to sue on its own and that,
Court’s will not normally interfere into the internal management affairs of a company
TAKING A BANK LOAN TO PAY TAX; WHY YOU SHOULD TAKE TAX ADVICE FIRST.
Leveraging your business to pay taxes through loans might create a situation where you trade one liability for another with more adverse commercial implications, bearing in mind that whereas tax due attracts interest at minimal rates(2%), commercial banks lend at much higher rates(above 15%).
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.”