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.
Tag Archives: Uganda revenue authority
ELECTRONIC TRANSACTIONS AND STAMP DUTY; TAX RISK FACTORS THAT COULD RESHAPE MOBILE MONEY AND DIGITAL LENDING
The obligation to pay stamp duty arises every time two parties execute an agreement to create, transfer, extend or extinguish a legal right or a liability.
The transaction is evidenced by an instrument which may be a physical document such as a loan agreement, a sale agreement or a memorandum of acknowledgement of a debt and in the case of e-commerce transactions, by an electronic data message or series of electronic data messages which collectively form the agreement instrument.
DISPOSAL OF REAL ESTATE ASSETS; WHEN DO WITHHOLDING TAX OBLIGATIONS ARISE?
Withholding tax on real estate transactions is advance capital gains tax on the disposal of ”business assets”. And in turn, Capital gains tax is a subcategory of business income under the Income tax Act. And finally if a transaction does not amount to a trading transaction, withholding tax under business income does not arise because the proceeds of the sale are not received as taxable income.
Taxation of Interest Income from Fixed Deposit Bank Accounts: Compliance Obligations and Related Matters.
The commercial advantages of being exempt include better cash flow and working capital management; Exempt businesses easily avoid financial distress by taking some relief from the harshness of having to pay tax before it’s due; that is to say, before the obligation to file a final return and account for income tax, arises; which for non-individuals is 6 months after the end of the tax year.
Webinar Invite: Overview of the Uganda Budget Highlights, 2024
Join us for an engaging and informative webinar where the MRT Tax and RSM Eastern Africa team will break down the Uganda Budget Highlights for 2024 and their tax and commercial implications to businesses.
NAVIGATING THE NEW TAX YEAR 2024-2025: KEY CONSIDERATIONS FOR BUSINESSES.
Enhanced focus on digital transactions
With the digital economy growing rapidly, tax authorities worldwide, including the URA, are paying more attention to digital transactions. E-commerce, digital services, and online marketplaces are becoming significant contributors to the economy, and they are now firmly on the tax radar. Businesses engaging in digital transactions should ensure they understand the tax implications and comply with the relevant digital services tax regime recently introduced under the VAT Act and the Income Tax Act.
A GOVERNMENT CONTRACTOR’S GUIDE TO DEEMED VAT.
Deemed paid VAT is a tax relief mechanism by which the government absolves a VAT trader from payment of the VAT charged by their customer on a VAT taxable transaction.
The deemed paid VAT relief is a commercially advantageous incentive that greatly improves cash flow resilience of businesses in the commercial chain of expensive infrastructure projects as well as those in capital intensive sectors owing to the fact that most often, these businesses must mobilise large amounts of capital from lenders or internally(shareholders) in order to be able meet the financing needs of executing such capital intensive projects. For this reason, it is therefore critical for taxpayers that fall under this category to properly grasp the deemed paid VAT principle and to understand its applicability and the commercial implications of this relief to their operations.
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.
A TRADER’S SIMPLE GUIDE TO IMPORT VAT.
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.