We help MNCs develop and achieve tax-efficient strategies through transfer pricing planning and other tax risk management strategies About the Organization
We are a premier Tax firm in Kampala, Uganda, specializing in Domestic and International tax planning and compliance services.
We serve a sophisticated clientele of MNCs with interests in Uganda and abroad. We offer highly competitive compensation and benefits, as well as advancement opportunities for talented, career-minded individuals. We also offer a friendly and collaborative work environment, training and development opportunities, interaction with sophisticated international clients, and many other benefits. We team
AFROX CONSULTING LIMITED.
1.Do you do business and earn income?
2. Has URA or any local tax authorities come to you for taxes?
3.Do you know how to compute your taxes and file your tax returns? Do apply for tenders and you have been required to present a tax clearance?
4. Do you want apply for a TIN?
We will help you: contact us on 0758871958 or 0703171315
visit our office at Equatoria shopping mall suite no. 444. It doesn't matter where you are located. We can still help
UGANDA: Tax & Revenue Reforms FY 2014/15
The new tax measures were aimed to raise revenues, enhance transparency in collection and enforcement, improve compliance and encourage investment by promoting value addition.
To this effect amendments to the tax laws to achieve the above objectives, simplify the laws, clarify ambiguous provisions and enhance compliance in the various tax laws are proposed.
INCOME TAX (details are in the Income Tax (Amendment) Bill 2014)
• Elimination of Initial Allowances on Eligible Property - a person who places an item of eligible property into service for the first time during a year of income is allowed a double tax deduction for that year of income of accelerated depreciation and ordinary depreciation. Initial allowance on eligible property was terminated in order to widen the tax base (To generate Shs.53.2 billion).
• Increase the Presumptive Tax Threshold from 1% to 3% - a lot of businesses in Uganda are operating informally making it difficult to apply the normal income tax regime. A presumptive tax regime was developed for them but the rates of tax on their income have been revised from 1% to 3% to raise revenue (To generate Shs.8 billion).
• Imposition of 15% tax on Sports and Pool Betting winnings and Designation of Gambling Houses to withhold the tax - introduced a 15% tax on winnings on sports and pool betting and designate gambling houses as agents to withhold the tax (To generate Shs.8.0 billion).
• Termination of exemption on Interest Income on Agricultural Loans – (To generate Shs.25.1 billion).
• Capital Gains Tax on sale of Commercial Property - introduced capital gains tax on the sale of commercial property (To generate Shs.52 billion).
• Income Tax Act Thin Capitalization Rules - limited deductions for interest paid to non-associated persons to maximum of 50 percent of earnings before interest and depreciation. This will ensure that it is effective in limiting the avoidance of tax abuse through low taxed interest payments.
• Termination of exemption on Income derived from Educational Institutions - terminated exemption on income derived by a person from managing or running an educational institution for commercial gain in order to ensure consistence with the principle of equity and transparency in the tax regime, and broadening the tax base by bringing more taxpayers into the tax net (To generate Shs.15 billion).
• Definition of Start-up Costs – to avoid the risk of getting a double benefit by mixing start-up costs with capital expenditure, start-up costs are restricted to only non-recurring preliminary costs associated with starting up a business.
VALUE ADDED TAX (details are in the VAT (Amendment Bill) 2014).
• Termination of Exemptions under the Second Schedule of the VAT Act on the following supply with effect from 1st July 2014:-
o Supply of New Computers, Desktop Printers, Computer Parts & Accessories and Computer Software Licenses;
o Supply of hotel accommodation in tourist lodges and hotels outside Kampala District;
o Supply of Liquefied Petroleum Gas;
o Supply of Feeds for Poultry and Livestock
o Supply of Agriculture and Diary Machinery
o Supply of Packaging Materials to the Diary and Milling Industries
o Supply of Salt
o Supply of Insurance Services except medical and life
o Supply of Specialized Vehicles, Plant and Machinery services and civil works related to roads and bridges construction, Agriculture, Water, Education and Health.
(To generate Shs.215 billion)
• Termination of Zero-rated Supplies under the Third Schedule of VAT Act on the following zero-rated supplies with effect from 1st July 2014:-
o Supply of Printing Services for Educational Materials
o Supply of cereals, grown, milled or produced in Uganda
o Supply of processed milk and milk products
o Supply of Machinery and Tools for Agriculture
o Supply of Seeds, Fertilizers, Pesticides and Hoes
(To generate Shs.30.4 billion)
C. EXCISE DUTY (Details are in the Excise Duty (Amendment) Bill 2014).
• Increase of Excise Duty of 50 shilling on Petrol and Diesel
• Reinstate Excise Duty of 200 shillings on Kerosene
• Increase Excise Duty on Sugar from 25 shillings to 50 shillings
• Introduction of 10% Excise Duty on Mobile Money Withdraw Fees
• Excise Duty on Bank Charges and money transfer fees
D. OTHER TAX MEASURES
• Treatment of Government Taxes –
o integrating Government in the tax system and removing any distortions and loopholes that arise by not treating Government transactions in the same way as those of private sector; all goods and services procured by Government, directly or with the donor support will be tax inclusive.
o Funds have been allocated in the budget to the relevant sectors and gross tax payment system managed under Finance will cease on 1-7-2014.
o To provide for a smooth transition to the new policy framework, all outstanding taxes (except PAYE, Withholding Tax and any other taxes withheld at source) owed to Uganda Revenue Authority by both the Central Government and Local Governments have been written off.
E. NON TAX REVENUE, NEW TAX LAWS AND OTHER REFORMS (Details are in Finance Bill 2014).
• Implementation of the Revised Non Tax Revenue rates by Government
• New Tax Laws and Other Reforms - the bills for the proposed new Excise Duty, Stamps Duty, Lotteries and Gaming laws as well as the Tax Procedures Code are before Parliament for consideration for enactment and implementation as part of the tax reforms for FY 2014/15.
• The modernization of the tax administration remains a priority to enhance revenue collection:
o To step up e-tax system and other information management systems to augment the capacity of tax administration to improve taxpayer compliance.
o Link e-tax with the IFMS system and accessibility of electronic services for small taxpayers enhanced.
• To improve tax administration, key performance indicators have been developed between the Finance Ministry and URA to monitor efficiency gains by tax administration and ensure that URA can deliver the set targets.
• East African Community and Regional Initiatives
o Initiatives have been implemented under EAC Northern Corridor to improve efficiency in the clearance of goods at Mombasa port and along the Corridor.
o Focus is on addressing the perennial bottlenecks that increase the cost of doing business in the region.
o Transit bonds (a major complaint of business community) have been eliminated and multiple customs documentation substantially reduced, which have resulted into reduction in the costs of transport for Uganda’s cargo and also deepening the EAC integration process.
• EAC Pre-Budget Consultations (Details of the decisions are in the East African Community (EAC) Gazette).
o Introduction of a 1.5% infrastructure levy on selected imports into EAC to finance railway infrastructure development.
F. REPORT OF TAX EXPENDIITURES FOR FY 2013/14
o Waived Stamp duty of Shs 200 million payable by Pride Micro Finance Limited
o Waived stamp duty of Shs 2 billion payable by Uganda Development Bank Limited on increase in share capital.
o Waived PAYE liability of shs 332,252,158/=for Gulu Independent Hospital for July 2002 - October 2005 in line with the tax waiver granted to the Northern Uganda business community in 2006 due to hardship in the aftermath of the war.
o As of 26th May 2014 government paid Shs.11, 503,215,750/= in respect of Hotels, Textile Manufacturers, Hospitals and Tertiary Institutions, and Non-Government Organizations with tax exemption clauses in their agreement.
Contact us on mob: 0758871958 or email:[email protected]onsulting.com or visit our office on Equatoria hotel Suite 444 Level 3 for advice on:
1. Taxation of private educational institutions
2. Taxation of small taxpayers (presumptive taxation)
3. Taxation of income from rented properties
4. How to use e-tax to apply for TIN, file tax returns, register payments, make objections to assessments by URA;
5. Methods used by URA to recovery tax arrears from taxpayers
6. The previleges available to compliant taxpayers - exemption from WHT, Tax Clearance certificates, payment of tax installments, e.t.c.
7. Tax audits by URA.
ICT ENABLEMENT TO DETECT TAX EVASION AND BLACK MONEY
Tax agencies must ensure that taxpayers and the general public fully understand their obligations under the tax laws. The failure of taxpayers to appropriately discharge their obligations may be caused by ignorance, carelessness, recklessness and deliberate evasion.
The generation of black money can occur in three areas: (a) non-deliberate actions due to ignorance of tax laws; (b) deliberate actions like aggressive tax planning and misuse of tax provisions; and (c) criminal activities (e.g. money laundering, smuggling, e.t.c) and fraud (e.g. corruption and theft of public funds).
Non-compliance with tax laws and regulations due to ignorance or carelessness can be addressed through taxpayer’s education, helping to taxpayers at the least cost, simplifying tax laws, tax reporting and computation of tax liability.
The other two areas involving aggressive tax planning or misuse the tax provisions meant to benefit specific industrial sectors, and outright non-disclosure/reporting of income can be addressed by use of technology in revenue administration.
Although both central and local government tax agencies have been computerized, they are yet to effectively address tax evasion and generation of black money. The key areas so far covered by technology are registration, reporting, filing and payments. There is narrow use of ICT as tax agencies are only targeting the already registered population and what it reports, which keeps the tax base narrow and overburdens the already compliant taxpayers. Tax agencies are yet to leverage the use of ICT effectively address non-filing, under-reporting income, and areas such as crime and fraud that generate black money, which most often escapes taxation.
ICT can be effective in these areas innovatively deployed to do data manipulation, large number crunching and data analysis. Every industry has a defined value chain, and by linking and comparing sales data reported by taxpayer with that reported by customers and other stakeholders, one can establish a bigger picture on actual income of a taxpayer and possibility of non-compliance, if any. To effectively utilize ICT, revenue agencies must ensure that there is standardization across all government Ministries, Departments and Agencies (MDA) in terms of data capturing and reporting and record keeping. The data from different public agencies should be interlinked so that if all the data is collected into one repository, it can clearly be segregated on the basis of taxpayer entity.
In a nutshell, effective detection of black money and tax evasion can be achieved through (1) standardization of data reporting formats, electronic book keeping, cross seeding of unique identifiers – TIN (URA) and COIN (KCCA), book-keeping of public projects through a common Central IT system, dematerialization of land and property records (remember property is the largest generator and consumer of black money), and centralization of generation and reporting of exports and imports, including banking transactions.
New Tax Policies in UG FY 2015/16 to Grow SMEs
When we say this years budget will spur growth for the SMEs! This is what we mean
1. Businesses with gross sales below 10million are not required to pay tax
2. The VAT threshold has increased from UGX 50M to UGX 150M implying that the presumptive tax threshold has similarly risen to UGX 150M
3. The cash accounting threshold raised from UGX 200M to 50...0M
4. Tax payers registering annual gross sales below 150M will not longer be required to file VAT returns saving them the cost of hiring experts and improving their cash flow
5. Domestic VAT on imports is to be adjusted upwards before 1 July to say
6. For Tax payers making gross sales UGX 50-150M, the presumptive tax rate is 1.5%
7. New standard flat rates introduced for businesses making gross sales below ugx50M but above UGX 10Million. These range from 100,000/= to 550,000/= based on location and nature of business and paid annually. This implies a tailor in Mbarara municipality should pay lower tax than one in Kampala Central! 8. Business entities can opt to pay presumptive tax in installments.
How Uganda Reformed Its Tax Administration?
The URA was established in 1991, and revenue collection improved dramatically during its early years. However, this performance proved difficult to sustain due to a number of factors among them corruption, outdated procedures and processes, and bureaucratic red tape. DfID, which had provided financial and technical assistance since URA’s establishment, decided in 1997 to support a diagnostic exercise to lead to a programme of modernisation. A Project Memorandum (PM) was in place by 2000 for a full Customs and Tax Modernisation Programme (MP), but was fully implemented in November 2004 following a major restructuring of the URA. During the 2004 restructuring, a unit staffed with 10 fulltime modernization managers and headed by Assistant Commissioner was created to take champion the modernization initiative. Under the new programme, DfID offered to continue to support URA in its efforts to reinforce the improvements in performance that had been achieved and to drive forward the modernisation initiatives and securing improvements in integrity. The DfID support included a significant training component to enhance staff skills, review of the Customs legislation, and core entry processing and enforcement procedures. The 2004 was a bold step by URA to undergo a major re-structuring and adopt a functional-based organizational structure with a one-stop taxpayer service instead of a non-integrated tax-based organization. The new structure allowed each functional division to enjoy economies of scale and reduces duplication of functions previously inherent in the old tax-based structure.
The MP’s new generation of tax administration system component was aimed to replace labor-intensive hardcopy filing with paperless e-filing system for domestic taxes. The URA revamped the whole system and took on an integrated database with workflow systems. The name of the new system was Integrated Tax Administration System (ITAS). The ITAS was piloted in 2010 in Kampala East in early 2010, and thereafter rolled out to cover the whole country. With the ITAS, the URA adopted a pipeline structure approach to process all tax returns based on pre-determined checks and criteria. It should be noted that the use of the ICT in tax administration was a success in Uganda, in part, because of the time and resources invested in the business process review and re-engineering that preceded the acquisition of the ITAS. This was supplemented by change management strategy that facilitated ownership and buy-in by all stakeholders. Presently, taxpayers can apply for TIN and conduct business transactions with different government Ministries, Departments and Agencies (MDAs) online using ITAS. It is easy to provide useful guidance via prompts while filling tax form. The ITAS has made it possible for businesses to file online tax returns, stamp duty forms, and information requests.
Uganda is one of the first sub-Saharan African countries to successfully integrate ICT in tax administration. The provision of e-services by the URA was part of a broader e-service initiative by Ugandan authorities. The potential benefits of online tax return filing are (a) the system can automatically check for data accuracy and completeness; (b) provide an instant acknowledgement to the taxpayer; (c) data can be captured for direct processing; (d) much faster processing of transactions; and (e) significant reduction in operational costs.
As a result, over 80% of the returns can now be processed by system while the remaining 20%, being the more complex cases, are identified by the system to be manually reviewed by tax officers. This has drastically improved the turnaround time of issuing a taxpayer identification number from several months to the current 24 hours. With the document workflow system, the URA eliminated a lot of problems associated with paper handling. Currently, tax returns and correspondences from taxpayers are system-stored. The ITAS automatically creates work items and fetches the relevant images for officers’ review of taxpayers’ enquiry. The system also adopts pre-defined supply rules such that work items are supplied to different tax officers according to their experience and skill levels. The annual operating expenditure has drastically fallen with estimates (though not scientifically proven) of savings enjoyed by URA being put at USD 2.70 per taxpayer who e-files. The increase in efficiency available from computer processing of data has been significant and greater use of computers is a priority for tax authorities.
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