Tag Archives: investing

MRT Tax in Strategic Partnership with The Cragus Group—The GCC’s Leading Tax and Transfer Pricing Advisory Group

MRT Tax is pleased to announce a new strategic collaboration partnership with The Cragus Group, a ITR (World Tax) Top Tier Tax Firm headquartered in the United Arab Emirates (UAE).

Cragus is consistently ranked ahead of the Big 4 in the GCC, and is widely regarded as one of the region’s most trusted tax and transfer pricing firms, with a specialized oil and gas practice.

“This partnership bolsters our advisory capabilities, bringing together deep local insight and international oil and gas tax expertise for upstream, midstream and downstream investments currently being undertaken in East Africa’s oil and gas sector.” Remarked, Mark Ruhindi, the Managing Partner

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.

URA AND USED CAR IMPORTERS; WHAT ARE THE OPTIONS FOR AGGRIEVED TAXPAYERS?

I would appreciate the tax administration expediency URA finds in attaching uniform valuations to all motor vehicle imports and lends credence to my own speculation that the reason why URA has so far avoided the opening of this pandora’s box at all costs is to keep government’s cost of customs duty administration under this head low. 

It also appears the tax body foresees a drop in customs duty collection from used motor vehicle imports hence their insistence on maintaining this system even when the courts have pronounced themselves on the legality of the same. 

The little or no public debate and commentary by technical people like myself for all these years has also so far saved the tax body the headache that comes with having to deal with hundreds of objections and litigation that would have arisen from objections by motor vehicle importers of all sizes and categories against import duty assessments but I think this will no longer be the case, because the law is the law. I implore the commissioner to desist from shifting goal posts in enforcement when it does not favour the government.

Intersection of company law, taxation & insolvency; Corporate structure best practices

Corporate structure best practices for leveraged operations

A businessman who habitually takes on liabilities to finance capital requirements for his commercial activities ought to split those activities into different companies. 

The sole purpose of trading through a company or companies is to trade with other people’s money, and so the thinner the capital the more advantageous from a commercial point of view and from a tax point of view. And so a smart businessman should be looking to separate key assets from the main trading activities by splitting the business.

The entity that borrows should be cash flow rich but asset poor. It is up to the banker/lender to protect itself through seeking guarantees or ordering a corporate reorganisation to curve risk before advancing large loans. But because the bulk of the bank’s work is done by non-lawyers, this hardly ever happens.  

This opens up opportunities for the businessman to lay traps for the bank/lender and to open up escape routes for the business to fend off aggressive recovery if it ever gets to that point, and to get away through corporate law technicalities and in the meantime allow the business the much needed window to reorganise and mobilise funds to pay off debt before the business is taken down by the lender.

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.