Tag Archives: TRANSACTION TAX

Deemed Disposals Capital Gains Taxation in Uganda: Residence and Control Changes(M&A), Insights from Kuku Foods(KFC) v URA

The Tax Appeals Tribunal (TAT) recently issued a landmark ruling in Kuku Foods Uganda Limited v Uganda Revenue Authority, reshaping how indirect corporate restructurings and ownership changes are taxed in Uganda.

The dispute arose from a Uganda Revenue Authority (URA) Capital Gains Tax (CGT) assessment of approximately UGX 4.235 billion levied against Kuku Foods Uganda Limited — the local operating entity of the KFC franchise following an offshore shareholding reorganization.

Key Commentary Bottom-line:

Uganda taxes changes in tax nexus through statutory realisation rules. The rules put in place deemed disposal or deemed realisation events, where Capital Gains Tax liabilities will arise, even where no ordinary commercial sale of an asset has occurred.

Where a taxpayer enters residence, the Income Tax Act protects both the taxpayer and the revenue authority by fixing the opening cost base of relevant assets at market value.

Where a taxpayer exits residence, the Act may impose an exit charge by deeming a disposal at market value.

Where a company located in Uganda undergoes a qualifying change in ownership, the Act may deem the company itself to have realised its assets and liabilities at market value.

TAT Clarifies VAT Refund Rules: Overpaid Tax and Recovery of VAT Wrongly Charged on Exempt Supplies

The Uganda Tax Appeals Tribunal has delivered an important decision on VAT refunds that settles a critical operational friction point between taxpayers and the Uganda Revenue Authority (URA).

The decision concerns key VAT principles and questions that have not been substantially litigated before in Uganda: whether a VAT refund application for VAT paid in error, on supplies which were supposed to be exempt, is valid; and whether a taxpayer who was unregistered for VAT purposes and not a VAT taxable person during the period in issue can make such a VAT refund application.

Case Citation: Portman Square Limited v Uganda Revenue Authority, TAT Application No. 179 of 2025.

The dispute centered on a Shs. 4,064,860,158 VAT refund claim arising from tax mistakenly charged by suppliers on VAT exempt hotel construction services and materials towards the Four Points by Sheraton hotel project situated in Kololo, Kampala.

This decision provides definitive clarity on the legal remedies available when VAT is paid in error on exempt supplies. Crucially, it establishes that a taxpayer’s registration status does not extinguish their statutory right to recover unlawfully collected tax, and it reprimands the tax authority’s tendency to shift administrative reconciliation burdens onto commercial entities.

Bujagali Energy v URA: TAT Clarifies Foreign Currency Conversion Rules for Infrastructure Taxation in Uganda

Uganda’s Tax Appeals Tribunal has delivered a land-mark ruling with far reaching Tax and commercial implications for East Africa’s infrastructure, project finance and the general public-private partnerships market.

In Bujagali Energy Limited v Uganda Revenue Authority, TAT Application No. 4 of 2024, the Tribunal was asked to determine the reckoning event when foreign currency denominated project costs should be converted into Uganda Shillings for purposes of computing the historical cost base of depreciable assets, for purposes of ascertaining the capital deduction allowances for those assets. 

The application challenged administrative additional income tax assessments arising principally from the interpretation of section 56(2) of the Income Tax Act, which governs the conversion of forex amounts into Uganda Shillings for tax reporting purposes, where the taxpayer has with the commissioner’s permission kept books of accounts in a foreign currency for tax reporting purposes.

The Tribunal favored the “date the amount is incurred” as the primary reckoning event for cost-base construction, where currency conversion tax rules are in purview. 

The decision is important because many infrastructure SPVs in Uganda and across East Africa are externally financed, maintain books in foreign currency, incur heavy capital expenditure over long construction periods, and can only claim capital tax deductions upon commissioning.

Important bottom-line:

The Tribunal’s view is that foreign currency accounting may explain the commercial architecture of a project, but it does not override the statutory conversion rules under the Income Tax Act. 

The Tribunal’s view that commercial architecture (keeping books in USD) does not dictate statutory tax rules, highlights the necessity of maintaining a “shadow” asset cost-base ledger in local currency from Day 1 of construction for capital intensive projects where accounting in foreign currency is mandated as part of project financing contractual obligations.

This is because the implication of the ruling is that a capital intensive project’s tax model must now reflect local currency conversion at every expenditure point where accounting is not in local currency.

Uganda’s 2026 Tax Amendment Bills: A Practical Guide to the Main Changes and Their Commercial Impact.

Uganda’s 2026 tax amendment bills are best read together, not in isolation. Taken as a package, they point to a set of key policy tweaks that includes: widening the tax base, moving collection closer to the point of payment, hardening digital compliance, and preservation of only a limited set of targeted incentives. 

Across income tax, VAT, excise duty, stamp duty, tax procedure, gaming, and road-use regulation, the direction is broadly the same: expand the effective tax net, improve collection at source, tighten compliance administration, and preserve only a limited number of targeted incentives.

The commercial significance of this package lies not only in tax rates. It lies just as much in timing, cash-flow impact, and compliance structure. Several of the proposals move tax collection closer to the payment event itself. Others raise transaction costs directly. Others still make the digital compliance framework harder to ignore.

Taken together, the package will matter to employers, lenders, investors, contractors, telecom operators, gaming businesses, developers, manufacturers, importers and high-net-worth individuals.

2026–27 PAYE Threshold Amendments in Uganda: Practical Impact on Resident Individual Taxpayers

The Uganda Ministry of Finance has proposed a revision to the income tax bands applicable to resident individuals in Uganda for the 2026–27 fiscal year.

Taken together, the proposed PAYE thresholds suggest a deliberate attempt to ease pressure on employment income, especially at the lower end of the scale.

These proposed amendments to the Income Tax Act are part of the broader raft of proposed amendments currently before parliament. 

The principal effect of the proposal is an upward adjustment of the tax-free threshold and a reconfiguration of the lower and middle bands.

At a practical level, the proposal appears designed to reduce PAYE exposure for resident employees, particularly those in the lower-income brackets. For higher earners, the proposal still yields relief, although the benefit becomes fixed once income moves beyond a certain level.

This note compares the current resident individual thresholds against the proposed regime, and illustrates the effect on taxpayers falling within each band using worked examples.

Practitioner Breakdown of Uganda’s Income Tax (Amendment) Bill, 2026: Wider Tax Base, New Commercial Pressure Points for Taxpayers.

The bill proposes two connected changes in relation to non-business assets. First, it amends section 20 to include income derived from the disposal of a non-business asset. Second, it amends section 130 to require a person who purchases a non-business asset to withhold tax, with Schedule 4 setting the rate at 6% of the gross payment.

This is a critical amendment for real estate especially and is a veiled attempt to return an amendment that was rejected by parliament in the year 2024. That amendment sought to impose a final withholding tax on gains on disposal of non-business assets at a rate of five percent, with gains computed using the already existing capital gains tax rules.

The earlier proposed tax had been imposed on gains from the disposal of; shares of a private company; land in cities or municipalities except the principal place of residence; and rental property that is subject to rental tax.

The current proposed amendment is therefore a further attempt by the government to assert taxing rights on non-trading transactions through a charge to tax similar disposals as rejected by parliament in 2024.

Uganda’s Tax Framework on Automatic Exchange Of Information On Foreign-Sourced Income: Key Compliance Insights.

This article is intended to serve as a practical point of reference for taxpayers, professionals and technocrats trying to understand the MAAC legal framework in Uganda. It proceeds with definitions first, process next, Uganda context after that, and finally the practical compliance implications.

The core point I emphasized in my keynote address at the Commissioner General’s AEOI and VDP awareness Breakfast meeting of the 27th February 2026 is once again emphasized in the article, which is that, in the age of automated transparency, the question is no longer whether offshore financial footprints can in principle become visible to tax authorities.

Tax administration is increasingly driven by technology, systems and data. As a result, taxpayer compliance is increasingly becoming evidence-driven. The practical question for the sophisticated taxpayer is no longer merely whether the tax authority can see the offshore footprint. It is whether the taxpayer can explain it, reconcile it and prove the filing position attached to it.

The real question therefore is whether the taxpayer, the reporting financial institution, or both, can explain that footprint coherently, consistently and with evidence.

Uganda’s Digital Services Tax Landscape in 2026 vs Pillar Two, Global Minimum Tax and the OECD’s Side-by-Side Package.

The international tax landscape continues to transform rapidly in response to the twin pressures of digitalisation and profit shifting by multinational enterprises (MNEs). Many low- and middle-income countries, including Uganda, have adopted unilateral Digital Services Taxes (DSTs) as an interim measure to ensure that digitalised businesses with minimal physical presence nonetheless contribute tax where economic value is created.

These unilateral measures emerged against the backdrop of stalled consensus on a coordinated global response to the taxation of digital activities under the Organisation for Economic Co-operation and Development (OECD) and G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS), Pillar Two.

However, as we enter 2026, the international tax policy environment has shifted again, notably with the recent agreement by over 145 jurisdictions on a revised global minimum tax package aimed at preserving taxing rights of jurisdictions where these MNEs operate through digitalised business models that require little or no physical presence. 

This agreement does not abandon Pillar Two; rather, it modifies its application through a “side-by-side” framework that allows certain jurisdictions, most notably the United States to operate parallel domestic minimum tax regimes while still achieving the policy objective of a 15 % global minimum tax.

This article explains where DST sits in this evolving framework, clarifies key positions from earlier DST debates, and assesses the implications of the side-by-side global minimum tax agreement for both DST regimes and broader international tax cooperation.

Resumption of Services and Tax Risk Outlook for 2026

As we enter the year ahead, we remain firmly aligned with your business objectives, to continue to deliver unrivaled technical acumen in managing each and every one of your mandates across tax and business law, and with the same value proposition of Integrated Tax and legal Excellence, through our two integrated professional services arms.

MRT Tax 2025 Year in Review: The Market and Key Tax Trends

As we draw the curtains on 2025, we reflect on a year defined by transformative shifts in the tax landscape, from local, regional and international standpoints.

2025 has also been a defining one for our firm across advisory, tax controversy, transactions practices, and we are grateful to our clients for the confidence placed in us through the sensitive and high‑stakes mandates we received, as you sought our guidance to help you navigate tax complexity with confidence.

We extend an equal amount of gratitude to our peers and collaborators–locally, regionally, and internationally.

A Year of Excellence, Collaboration, and Global Recognition

Our journey this year has been marked by significant milestones that reinforce MRT Tax’s position as a leading tax firm in Uganda.

Recognition and Rankings:

MRT Tax received nomination for the prestigious Tax Firm of the Year Award – Uganda at the ITR EMEA Tax Awards 2025 and was subsequently recognised in the ITR World Tax 2026 rankings as a Notable leading tax practice in Uganda.

The Founding Managing Partner, Mark Ruhindi received Individual Recognition as a Highly Regarded Practitioner-General Corporate Tax.

Strategic Alliances:

We entered into strategic collaborations with The Cragus Group, one of the GCC’s leading independent tax and transfer pricing firms, and Tax Consulting South Africa (TCSA), a market leader in taxation in South Africa.

These relationships significantly enhanced our ability to advise our clients in international trade on cross‑border structuring, transfer pricing, and international tax risk that crosses into those key trade and investment corridors and vice-versa.