In the world of VAT, importation is considered a form of ‘value addition.’ When an item is imported, its value is enhanced because it has entered a new stage of the production or trade chain. It’s important to note that a product doesn’t have to be manufactured locally to be subject to VAT. As long as it plays a role in the extended production or trade chain that leads to a final consumer’s purchase of any good in Uganda, VAT applies to the transaction so long as it is not in respect of an exempt supply. This is where the concept of import VAT becomes significant, as it can be treated as an input tax credit to the benefit of the importer at compliance stage.
Tag Archives: taxation
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.
KACITA Vs LANDLORDS; ADDRESSING THE QUESTIONS ON VAT ON COMMERCIAL PROPERTY RENT PAYMENTS.
At law, in transactions involving VAT traders, the absence of a clear segregation of the VAT component from the agreed-upon price implies that VAT is inherently integrated into the total amount paid. In the absence of a clear distinction being made of the VAT component from the consideration paid or rather if provision is not made for the VAT from the price agreed upon with the buyer(the tenant in this case), then VAT is deemed to have formed part of the price invoiced. In this case the 18% VAT already forms part of the rent that’s currently being paid by tenants, regardless of whether or not there was an express agreement to the contrary from the beginning.
TAKING A BANK LOAN TO PAY TAX; HERE’S 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 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.
TAX COMPLIANCE AND TAX POSITIONS; WHY IT MATTERS TO UNDERSTAND YOUR TAX POSITIONS.
Uganda operates a self assessment taxation system where the presumption is that the tax payer’s reporting is premised on the correct tax positions and that’s why tax problems never emerge immediately until years much later.
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.
THE AIRTEL UGANDA IPO: EVALUATING AIRTEL’s TAX RISK AND DIVIDEND POLICY – KEY CONSIDERATIONS FOR INVESTORS.
I do note from the prospectus that, Airtel Uganda has taken commendable steps in securing such private rulings pertaining to a significant portion of its inter-party transactions. In my assessment, this proactive measure effectively mitigates a significant risk factor, particularly regarding the prospect of the Uganda Revenue Authority (URA) raising any future unanticipated tax liabilities against the business in respect of these transactions.
RESIDENCY TAX AVOIDANCE: THE STORY OF BRITISH BILLIONAIRE LORD SUGAR AND HIS £186M TAX TAB AFTER A RECENTLY FAILED AVOIDANCE SCHEME.
Ugandan tax residency rules, just like those of many commonwealth jurisdictions are in many respects similar to those pertaining in the UK. Under Ugandan law, a taxpayer who is a natural person is resident for tax purposes if they have a permanent home in Uganda, or they are present in Uganda for an aggregate of 183 days in the year of income or are present in Uganda for a period averaging 122 days in the year of income and in the two years preceding the year of income or if they are a Government employee posted abroad during the year of income.