Income Tax Act

Section Application of Act Section This Act applies to years of income commencing on or after 1st July, 1997.

Section Interpretation Section In this Act, unless the context otherwise requires— “ amateur sporting association ” means an association whose sole or main object is to foster or control any athletic sport or game and whose members consist only of amateur sports persons or affiliated associations, the members of which consist only of amateur sports persons; “ approved ” means approved by the Minister under regulations made under section 151 ; “ assessed loss ” has the meaning in section 36 ; “ assessment ” means— (a) the ascertainment of the chargeable income of, and the amount of tax payable on it by, a taxpayer for a year of income under this Act; (b) the ascertainment of the rental income of, and the amount of tax payable on it by, an individual for a year of income under this Act; (c) the ascertainment of the amount of penal tax payable by a person under this Act; or (d) any decision of the Commissioner General which, under this Act, is subject to objection and appeal; “ associate ” has the meaning in section 3 ; “ beneficial owner ” means the natural person who ultimately owns or controls a customer or the natural person on whose behalf a transaction is conducted and includes a person who exercises ultimate control over a legal person or arrangement and— (a) in relation to a legal person includes— (i) the natural person who either directly or indirectly holds at least ten percent of shares or voting rights of the legal person ; (ii) the natural person who exercises control of the legal person through other means including personal or financial superiority; and (iii) the natural person who has power to make or influence decisions of a legal person ; (b) in relation to trusts includes— (i) the settlor ; (ii) the trustee ; (iii) the protector; (iv) the beneficiary or the individual benefitting from the trust who is yet to be determined; and (v) any other natural person exercising ultimate control of the trust ; and (c) in relation to other legal arrangements similar to trusts, the natural person who holds positions equivalent to those referred to in subparagraph (b) ; “ building society ” means a building society registered under the Building Societies Act; “ business ” includes any trade, profession, vocation or adventure in the nature of trade, but does not include employment ; “ business asset ” means an asset which is used or held ready for use in a business , and includes any asset held for sale in a business and any asset of a partnership or company ; “ business debt ” means— (a) in the case of a debtor— (i) a debt obligation , the proceeds of which are used to acquire a business asset or to incur an expense of a business ; (ii) a debt obligation arising, as a result of being given time to pay, on the acquisition of a business asset or the incurring of an expense of a business ; or (iii) any debt obligation of a partnership or company ; or (b) in the case of a creditor, any debt obligation owed to the creditor that was entered into or arose in the course of the creditor’s business ; “ business income ” has the meaning in section 18 ; “ chargeable income ” has the meaning in section 15 ; “ chargeable trust income ” has the meaning in section 69 ; “ citizen ” means— (a) a natural person who is a citizen of a Partner State of the East African Community; and (b) a company or a body of persons incorporated under the laws of a Partner State of the East African Community in which at least fifty-one percent of the shares are held by a person who is a citizen of a Partner State of the East African Community; “ collective investment scheme ” has the meaning assigned to it by section 2 of the Collective Investment Schemes Act; “ Commissioner General ” means the Commissioner General appointed under the Uganda Revenue Authority Act; “ company ” means a body of persons corporate or unincorporate, whether created or recognised under the law in force in Uganda or elsewhere, and a unit trust , but does not include any other trust or a partnership ; “ consideration ” includes, the total amount in money or of payment in kind, paid or payable for the supply of goods, services or sale of land by any person , directly or indirectly, including any duties, levies, fees, and charges other than tax paid or payable on, or by reason of, the supply, reduced by any discounts or rebates allowed and accounted for at the time of the supply or sale; “ cost base ”, in relation to an asset, has the meaning in section 50 ; “ court ” means a court of competent jurisdiction; “ currency point ” has the value assigned to it in Schedule 1 to this Act; “ debenture ” includes any debenture stock, mortgage, mortgage stock, loan, loan stock or any similar instrument acknowledging indebtedness, whether secured or unsecured; “ debt obligation ” means an obligation to make a repayment of money to another person , including accounts payable and the obligations arising under promissory notes, bills of exchange and bonds; “ dependent ”, in relation to a member of a retirement fund , means a spouse of the member, any child, including an adopted child, of the member who is under the age of eighteen years or any other relative of the member who the Commissioner General is satisfied relies on the member for support; “ depreciable asset ” means any plant or machinery, or any implement, utensil or similar article, which is wholly or partly used, or held ready for use, by a person in the production of income included in gross income and which is likely to lose value because of wear and tear, or obsolescence; “ disposal ” has the meaning in section 49 ; “ dividend ” includes— (a) where a company issues debentures or redeemable preference shares to a shareholder— (i) in respect of which the shareholder gave no consideration , an amount equal to the greater of the nominal or redeemable value of the debentures or shares; or (ii) in respect of which the shareholder gave consideration which is less than the greater of the nominal or redeemable value, an amount equal to the excess; (b) any distribution upon redemption or cancellation of a share, or made in the course of liquidation, in excess of the nominal value of the share redeemed, cancelled or subject to liquidation; (c) in the case of a partial return of capital, any payment made in excess of the amount by which the nominal value of the shares was reduced; (d) in the case of a reconstruction of a company , any payment made in respect of the shares in the company in excess of the nominal value of the shares before the reconstruction; (e) the amount of any loan, the amount of any payment for an asset or services, the value of any asset or services provided, or the amount of any debt obligation released, by a company to, or in favour of, a shareholder of the company or an associate of a shareholder to the extent to which the transaction is, in substance, a distribution of profits, but does not include a distribution made by a building society ; (f) the issue of bonus shares to shareholders; however, bonus shares shall only be taxable upon disposal ; or (g) the payment of the excess of the return on investment in the bond to the bond holder under Islamic financial business for each payment period over the interest as defined in paragraph (f) in the definition of the term “ interest ” in this section; “ employee ” means an individual engaged in employment ; “ employer ” means a person who employs or remunerates an employee ; “ employment ” means— (a) the position of an individual in the employment of another person ; (b) a directorship of a company ; (c) a position entitling the holder to a fixed or ascertainable remuneration; or (d) the holding or acting in any public office; “ employment income ” has the meaning in section 19 ; “ exempt organisation ” means any company , institution or irrevocable trust — (a) which is— (i) an amateur sporting association ; (ii) a religious, charitable, educational institution or research institution whose object is not for profit; or (iii) a labour union, an association of employees, an association of employers registered under any law of Uganda, or an association established for the purpose of promoting farming , mining, tourism, manufacturing or commerce and industry in Uganda; (iv) a body established by law for the purpose of regulating the conduct of professionals; and (b) which has been issued with a written ruling by the Commissioner General currently in force stating that it is an exempt organisation; and (c) none of the income or assets of which confers, or may confer, a private benefit on any person ; or (d) the National Medical Stores; “ farming ” means pastoral, agricultural, plantation, horticultural or other similar operations; “ financial institution ” means any person carrying on the business of receiving funds from the public or from members through the acceptance of money deposits repayable upon demand, after a fixed period, or after notice, or any similar operation through the sale or placement of bonds, certificates, notes or other securities, and the use of such funds either in whole or part for loans, investments or any other operation authorised either by law or by customary banking practices, for the account and at the risk of the person doing such business ; “ foreign-source income ” means any income which is not derived from sources in Uganda; “ gross income ” has the meaning in section 17 ; “ gross turnover ”, in relation to a resident taxpayer , for a year of income , means— (a) the amount shown in the recognised accounts of the taxpayer as the gross proceeds derived in carrying on a business or businesses during the year of income , including the gross proceeds arising from the disposal of trading stock , without deduction for expenditures or losses incurred in deriving that amount; and (b) the amount, if any, shown in the recognised accounts of the taxpayer as the amount by which the sum of the gains derived by the taxpayer during the year of income from the disposal of business assets, other than trading stock , exceeds the losses incurred by the taxpayer during the year in respect of the disposal of such assets; “ incapacitated person ” means a resident individual adjudged under a law in Uganda to be suffering from mental illness; “ incapacitated person’s trust ” means a trust established for the benefit of an incapacitated person ; “ industrial building ” means any building which is wholly or partly used, or held ready for use, by a person in— (a) manufacturing operations; (b) research and development into improved or new methods of manufacture; (c) mining operations ; (d) an approved hotel business ; (e) an approved hospital; or (f) an approved commercial building; “ interest ” includes— (a) any payment , including a discount or premium, made under a debt obligation which is not a return of capital; (b) any swap or other payments functionally equivalent to interest; (c) any commitment, guarantee or service fee paid in respect of a debt obligation or swap agreement ; (d) a distribution by a building society ; (e) any payment , including a discount or premium, made under sale-based financing or lease-based financing under Islamic financial business ; (f) any payment as the excess of the total amount paid by a bond issuer over and above the amount received from a bond holder under Islamic financial business for each payment period calculated at a rate not exceeding the rate determined by the Bank of Uganda and does not include dividends; or (g) a partner’s share of partnership income derived from a partnership arrangement under Islamic financial business ; “ Islamic financial business ” means financial business undertaken by a person that conforms to Shari’ah principles and includes— (a) the business of receiving property into profit sharing investment accounts or of managing such accounts; (b) any other business of a person which involves or is intended to involve the entry into one or more contracts under Shari’ah or otherwise carried out or purported to be carried out in accordance with Shari’ah principles including— (i) equity or partnership financing; (ii) lease-based financing; (iii) sale-based financing; (iv) currency exchange contracts; or (v) fee-based activity; (c) the purchase of bills of exchange, certificates of Islamic deposit or other negotiable instruments; (d) the acceptance or guarantee of any liability, obligation or duty of any person ; and (e) the business of providing finance by all means, including through the acquisition, disposal or leasing of assets or through the provision of services which have similar economic effect and are economically equivalent to any other financial business ; “ life insurance business ” has the meaning in section 16(3) ; “ listed institution ” means an institution listed in Schedule 2 to this Act; “ local authority ” means any public body established under a law of Uganda and having control over the expenditure of revenue derived from rates or taxes imposed by law upon the residents of the areas for which that body is established; “ local council ” has the same meaning as in the Local Governments Act ; “ manufacturing ” means the substantial transformation of tangible movable property, including power generation and water supply; “ mineral ” has the same meaning as in the Mining and Minerals Act; “ mining operations ” includes every method or process by which any mineral is won from the soil or from any substance or constituent of the soil; “ Minister ” means the Minister responsible for finance; “ natural resource payment ” means— (a) a payment , including a premium or like payment , made as consideration for the right to take minerals or a living or non-living resource from the land; or (b) a payment calculated in whole or in part by reference to the quantity or value of minerals or a living or non-living resource taken from the land; “ nominal value ”, in relation to a share or debenture , means the paid-up amount of the share or face value of the debenture , including any premium paid in respect of the share or debenture ; “ non-resident person ” has the meaning in section 14 ; “ partnership ” means an association of persons carrying on business for joint profit, and includes an equity or partnership financing under Islamic financial business ; “ payment ” includes any amount paid or payable in cash or kind, and any other means of conferring value or benefit on a person ; “ person ” includes an individual, a partnership , a trust , a company , a retirement fund , a government, a political subdivision of a government and a listed institution ; “ property income ” has the meaning in section 20 ; “ provisional taxpayer ” means a person liable for provisional tax under section 121 ; “ relative ”, in relation to an individual, means— (a) an ancestor, a descendant of any of the grandparents, or an adopted child, of the individual, or of a spouse of the individual; or (b) a spouse of the individual or of any person specified in paragraph (a) of this definition; “ rent ” means any payment , including a premium or like amount, made as consideration for the use or occupation of, or the right to use or occupy, land or buildings; “ rental income ”, in relation to a person for a year of income , means the total amount of rent derived by the person for the year of income from the lease of immovable property in Uganda with the deduction of any expenditures and losses incurred in respect of the property; “ resident company ” has the meaning in section 10 ; “ resident individual ” has the meaning in section 9 ; “ resident partnership ” has the meaning in section 12 ; “ resident person ” means a resident individual , resident company , resident partnership , resident trust , resident retirement fund , the Government of Uganda or a political subdivision of the Government of Uganda; “ resident retirement fund ” has the meaning in section 13 ; “ resident taxpayer ” means a taxpayer who is a resident person ; “ resident trust ” has the meaning in section 11 ; “ retirement fund ” means a pension or provident fund established as a permanent fund maintained solely for either or both of the following purposes— (a) the provision of benefits for members of the fund in the event of retirement; or (b) the provision of benefits for dependents of members in the event of the death of the member; “ royalty ” means— (a) any payment , including a premium or like amount, made as consideration for— (i) the use of, or right to use, any patent, design, trademark or copyright, or any model, pattern, plan, formula or process, or any property or right of a similar nature; (ii) the use of, or the right to use— (A) any motion picture film; (B) any video or audio material, whether stored on film, tape, disk or other medium, for use in connection with television or radio broadcasting; or (C) any sound recording or advertising matter connected with material referred to in subparagraph (a)(ii)(A) or (B) of this definition; (iii) the use of, or the right to use, or the receipt of, or right to receive, any video or audio material transmitted by satellite, cable, optic fibre or similar technology for use in connection with television, internet or radio broadcasting; (iv) the imparting of, or undertaking to impart, any scientific, technical, industrial or commercial knowledge or information; (v) the use of, or right to use, any tangible movable property; (vi) the rendering of, or the undertaking to render, assistance ancillary to a matter referred to in paragraph (a)(i) to (v) of this definition; or (vii) a total or partial forbearance with respect to a matter referred to in paragraph (a)(i) to (vi) ; or (b) any gain on the disposal of any right or property referred to in paragraph (a) of this definition; “ substituted year of income ” has the meaning in section 37 ; “ swap agreement ” means an arrangement between a person who has incurred a debt obligation with a floating interest rate and a person who has incurred a debt obligation with a fixed interest rate under which the persons agree to exchange their interest obligations; “ swap payment ” means a payment made under a swap agreement ; “ takaful ” means insurance business conducted in accordance with Shari’ah principles; “ tax ” means any tax imposed under this Act; “ tax-exempt employer ” means an employer whose income is exempt from tax ; “ taxpayer ” means any person who derives an amount subject to tax under this Act and includes— (a) any person who incurs an assessed loss for a year of income ; or (b) for the purposes of any provision relating to a return, any person required by this Act to furnish such a return; “ trading stock ” includes anything produced, manufactured, purchased or otherwise acquired for manufacture, sale or exchange, as well as consumable stores; “ transitional year of income ” has the meaning in section 37 ; “ trust ” means any arrangement affecting property in relation to which there is a trustee ; “ trustee ” includes— (a) any person appointed or constituted as such by act of the parties, by will, by order or declaration of any court or by operation of the law; (b) an executor, administrator, tutor or curator; (c) a liquidator or judicial manager; (d) any person having the administration or control of property subject to a trust ; (e) any person acting in a fiduciary capacity; (f) any person having, either in a private or official capacity, the possession, direction, control or management of any property of a person under a legal disability; and (g) any person who manages assets under a private foundation or other similar arrangement; “ underlying ownership ”, in relation to a person other than an individual, means an interest held in, or over, the person directly or indirectly through interposed companies, partnerships or trusts by an individual or by a person not ultimately owned by individuals; “ unit trust ” means a unit trust registered or required to be registered as Parliament may by law prescribe; “ year of income ” means the period of twelve months ending on 30th June and includes a substituted year of income and a transitional year of income .

Section Associate Section Without limiting the generality of subsection (1) , the following are treated as an associate of a person — where the person is a company — For the purposes of this Act, where any person , not being an employee , acts in accordance with the directions, requests, suggestions or wishes of another person whether or not they are in a business relationship and whether those directions, requests, suggestions or wishes are communicated to the first-mentioned person , both persons are treated as associates of each other. a relative of the person , unless the Commissioner General is satisfied that neither person acts in accordance with the directions, requests, suggestions or wishes of the other person ; a partner of the person , unless the Commissioner General is satisfied that neither person acts in accordance with the directions, requests, suggestions or wishes of the other person ; a partnership in which the person is a partner where the person , either alone or together with an associate or associates under another application of this section, controls fifty percent or more of the rights to income or capital of the partnership ; the trustee of a trust under which the person , or an associate under another application of this section, benefits or may benefit; a company in which the person , either alone or together with an associate or associates under another application of this section, controls fifty percent or more of the voting power in the company either directly or through one or more interposed companies, partnerships or trusts; where the person is a partnership , a partner in the partnership who, either alone or together with an associate or associates under another application of this section, controls fifty percent or more of the rights to income or capital of the partnership ; where the person is the trustee of a trust , any other person who benefits or may benefit under the trust ; or a person who, either alone or together with an associate or associates under another application of this section, controls fifty percent or more of the voting power in the company , either directly or through one or more interposed companies, partnerships or trusts; or another company in which the person referred to in subparagraph (i) , either alone or together with an associate or associates under another application of this section, controls fifty percent or more of the voting power in that other company , either directly or through one or more interposed companies, partnerships or trusts.

Section Income tax imposed Section Where a taxpayer is allowed more than one tax credit for a year of income , the credits shall be applied in the following order— Subject to subsection (8) , where the gross turnover of a resident taxpayer for a year of income derived from carrying on a business or businesses is less than one hundred fifty million shillings, the income tax payable by the taxpayer for the year of income shall be determined in accordance with Schedule 3 to this Act, unless the taxpayer elects by notice in writing to the Commissioner General for subsection (2) to apply; and— Subject to and in accordance with this Act, a tax to be known as income tax shall be charged for each year of income and is imposed on every person who has chargeable income for the year of income . Subject to subsections (4) and (5) , the income tax payable by a taxpayer for a year of income is calculated by applying the relevant rales of tax determined under this Act to the chargeable income of the taxpayer for the year of income and from the resulting amount are subtracted any tax credits allowed to the taxpayer for the year of income . the foreign tax credit allowed under section 80 ; then the tax credit allowed under section 146 ; then the tax credit allowed under section 121(8) . Subject to subsection (7) , where the gross income of a taxpayer for a year of income consists exclusively of employment income derived from a single employer from which tax has been withheld as required under section 126 , the income tax payable by the taxpayer for the year of income is the amount equal to the sum of the amounts required to be withheld from such income under section 126 . the tax shall be a final tax on the business income of the taxpayer ; no deductions shall be allowed under this Act for expenditures or losses incurred in the production of the business income ; and no tax credits allowed under this Act shall be used to reduce the tax payable on the business income of the taxpayer , except as provided in Schedule 3 to this Act. An election under subsection (5) must be lodged with the Commissioner General by the due date for the taxpayer ’s return for the year of income to which it relates. Subsection (4) shall not apply to a taxpayer for a tax year if the employment income of that taxpayer for that year includes an amount under section 19(1)(g) . Subsection (5) does not apply to a resident taxpayer who is in the business of providing medical, dental, architectural, engineering, accounting, legal or other professional services, public entertainment services, public utility services or construction services.

Section Rental tax imposed Section The tax payable by any person under this section for a year of income is— The tax imposed under this section on any person is separate from the tax imposed under section 4 and— Subject to and in accordance with this Act, a tax shall be charged for each year of income and is imposed on every person who has rental income for the year of income . where the person is an individual, calculated by applying the relevant rates of tax determined under section 6(2) to the rental income derived by the individual for the year; where the person is a company , calculated by applying the relevant rates of tax determined under section 7(2) to the rental income derived by the company for the year; where the person is a trustee of a trust or a retirement fund , calculated by applying the relevant rates of tax determined under section 8(5) to the rental income derived by the trustee or retirement fund for the year; where the person is a partnership , calculated by applying the relevant rates of tax on the individual partners under section 6(2) to the rental income derived by the partnership for the year. the rent derived by a person shall not be included in the gross income of the person which is subject to tax under this Act for any year of income ; the expenditures and losses incurred by a person , other than an individual or partnership , in the production of rent shall be allowed as a deduction for any year of income only as provided for in section 22(1)(c) ; the expenditures incurred, or gross rent derived by a partnership shall be allocated to the partners in accordance with section 66(5) and (7) of this Act. For the purposes of assessing rental tax under this section, the Minister shall, by statutory instrument, prescribe estimates of rent based on the rating of the rental property in a specific location. A statutory instrument made under subsection (4) , shall only apply to a person who fails to file a return in accordance with subsection (1) or whose return is misleading on the face of it and has been contested by the Commissioner General . A statutory instrument made under this section shall come into force after approval by Parliament.

Section Resident company Section A company is a resident company for a year of income if it— is incorporated or formed under the laws of Uganda; has its management and control exercised in Uganda at any time during the year of income ; or undertakes the majority of its operations in Uganda during the year of income .

Section Resident trust Section A trust is a resident trust for a year of income if— the trust was established in Uganda; at any time during the year of income , a trustee of the trust was a resident person ; or the trust has its management and control exercised in Uganda at any time during the year of income .

Section Resident partnership Section A partnership is a resident partnership for a year of income if, at any time during that year, a partner in the partnership was a resident person .

Section Resident retirement fund Section A retirement fund is a resident retirement fund for a year of income if it— is organised under the laws of Uganda; is operated for the principal purpose of providing retirement benefits to resident individuals; or has its management and control exercised in Uganda at any time during the year of income .

Section Non-resident person Section Subject to subsection (2) , a person is a non-resident person for a year of income if the person is not a resident person for that year. Where section 9(2) or (3) applies, an individual is a non-resident person for that part of the year of income in which the individual is not a resident individual .

Section Resident individual Section Subject to subsections (2) and (3) , an individual is a resident individual for a year of income if that individual— is present in Uganda— has a permanent home in Uganda; for a period of, or periods amounting in aggregate to one hundred eighty-three days or more in any twelve-month period that commences or ends during the year of income ; or during the year of income and in each of the two preceding years of income for periods averaging more than one hundred twenty-two days in each such year of income ; or is an employee or official of the Government of Uganda posted abroad during the year of income . An individual who is a resident individual under subsection (1) for a year of income , in this section referred to as the “current year of income ”, but who was not a resident individual for the preceding year of income is treated as a resident individual in the current year of income only for the period commencing on the day on which the individual was first present in Uganda. An individual who is a resident individual for the current year of income but who is not a resident individual for the following year of income is treated as a resident individual in the current year of income only for the period ending on the last day on which the individual was present in Uganda.

Section Chargeable income Section Subject to section 16 , the chargeable income of a person for a year of income is the gross income of the person for the year less total deductions allowed under this Act for the year.

Section Chargeable income arising from insurance business Section The chargeable income of a person for a year of income arising from the carrying on of a short-term insurance or general takaful business is determined in accordance with Schedule 5 to this Act. Where a person to whom subsection (1) applies derives income charged to tax other than income arising from the carrying on of a short-term insurance or general takaful business for a year of income , the chargeable income determined under subsection (1) is added to that other income for the purposes of determining the person ’s total chargeable income for the year of income . In this section— “insurance business ” means the business of, or in relation to the issue of, or the undertaking of liability under, life policies, or to make good or indemnify the insured against any loss or damage, including liability to pay damages or compensation contingent upon the happening of a specified event; “ life insurance business ” means business of any of the following classes— (a) effecting, carrying out and issuing policies on human life or contracts to pay annuities on human life; (b) effecting, carrying out and issuing contracts of insurance against the risk of the person insured sustaining injury or dying as the result of an accident or of an accident of a specific class, or becoming incapacitated in consequence of disease or of diseases of specified classes, being contracts that are expressed to be in effect for a period of not less than five years or without limit of time and either are not expressed to be terminable by the insurer before the expiry of five years from taking effect or are expressed to be so terminable before the expiry of such period only in special circumstances specified in the contract; or (c) effecting, carrying out and issuing of insurance whether effected by the issue of policies, bonds, endowment certificates or otherwise, where, in return for one or more premiums paid to the insurer, an amount or series of amounts is to become payable to the insurer in the future, not being such contracts as fall within paragraph (a) or (b) ; and “short-term insurance business ” means any insurance business , including general takaful , which is not a life insurance business or family takaful ; “family takaful ” has the same meaning as life insurance business .

Section Interpretation of Part Section In this Part— “ branch ” means a place where a person carries on business , other than investing in Islamic financial business in the case of equity or partnership agreement and includes— (a) a place where a person is carrying on business through an agent, other than a general agent of independent status acting in the ordinary course of business as such; (b) a place where a person has, is using, is installing substantial equipment or substantial machinery for ninety days or more; (c) a place where a person is engaged in a construction, assembly or installation project for ninety days or more, including a place where a person is conducting supervisory activities in relation to such a project; or (d) the furnishing of services, including consultancy services, by a person through employees or other personnel engaged by the person for such purpose, but only if the activities of that nature continue for the same or a connected project for a period or periods aggregating more than ninety days in any twelve-month period; “ immovable property ” includes a mining right , petroleum right , mining information , or petroleum information, any intangible asset which is a business asset or any part of the business ; “ management charge ” means any payment made to any person , other than a payment of employment income , as consideration for any managerial services, however calculated; and “ mining information ”, “ mining right ” and “ petroleum right ” have the meanings assigned in section 89 .

Section Source of income Section Income is derived from sources in Uganda to the extent to which it is— employment income or a fee for the provision of services— an amount— a royalty — interest where— a pension or annuity where— derived by a resident person in carrying on a business except to the extent that it is attributable to a business carried on by the person through a branch outside Uganda; derived by a non-resident person in carrying on a business through a branch in Uganda; derived by a resident person in carrying on a business as owner or charterer of a vehicle, ship or aircraft, wherever such vehicle, ship or aircraft may be operated; derived from employment or services exercised or rendered in Uganda; paid by a resident person , other than as an expenditure of a business carried on by a person outside Uganda through a branch ; or paid by non-resident person as an expenditure of a business carried on by a person through a branch in Uganda; derived by a resident individual from any employment exercised or services rendered as a driver of a vehicle, or an officer or member of a crew of any vehicle, ship or aircraft, wherever the vehicle, ship or aircraft may be operated; derived from the rental of immovable property located in Uganda; derived from the disposal of an interest in immovable property located in Uganda or from the disposal of a share in a company the property of which consists directly or indirectly principally of an interest or interests in such immovable property , where the interest or share is a business asset ; derived from the direct or indirect change of ownership by fifty percent or more, of a person other than an individual, a local government, a political subdivision of a local government and a listed institution located in Uganda; derived from the disposal of movable property, other than goods, under an agreement made in Uganda for the sale of the property, wherever the property is to be delivered; included in the business income of a taxpayer under section 27(5) in respect of the disposal of a depreciable asset used in Uganda; or treated as income under section 61 , where the deduction was allowed for an expenditure, loss or bad debt incurred in the production of income sourced in Uganda; paid by a resident person , other than as an expenditure of a business carried on by the person outside Uganda through a branch ; paid by non-resident person as an expenditure of a business carried on by the person through a branch in Uganda; or arising from the disposal of industrial or intellectual property used in Uganda; the debt obligation giving rise to the interest is secured by immovable property located, or movable property used, in Uganda; the payer is a resident person ; or the borrowing relates to a business carried on in Uganda; a dividend or director’s fee paid by a resident company ; the pension or annuity is paid by the Government of Uganda or by a resident person ; or the pension or annuity is paid in respect of an employment exercised or services rendered in Uganda; a natural resource payment in respect of a natural resource taken from Uganda; a foreign currency debt gain derived in relation to a business debt which has arisen in the course of carrying on a business in Uganda; a contribution to a retirement fund made by a tax-exempt employer in respect of an employee whose employment is exercised in Uganda; a management charge paid by a resident person ; or taxable in Uganda under an international agreement; or attributable to any other activity which occurs in Uganda, including an activity conducted through a branch in Uganda.

Section Foreign source employment income Section Foreign source employment income derived by a resident individual is exempt from tax if the individual has paid foreign income tax in respect of the income. A resident individual is treated as having paid foreign income tax on foreign source employment income if tax has been withheld and paid to the revenue authority of the foreign country by the employer of the individual.

Section Foreign tax credit Section The foreign income tax paid by— A resident taxpayer is entitled to a credit, in this section referred to as a “foreign tax credit”, for any foreign income tax paid by the taxpayer in aspect of foreign source income included in the gross income of the taxpayer . The amount of the foreign tax credit of a taxpayer for a year of come shall not exceed the Ugandan income tax payable on the taxpayer ’s foreign source income for that year, calculated by applying the average rate of Ugandan income tax of the taxpayer for that year to the taxpayer ’s net foreign source income for that year. The calculation of the foreign tax credit of a taxpayer for a year of income is made separately for foreign source business income and other income derived from foreign sources by the taxpayer during the year. a partnership is treated as paid by the partners; a trustee is treated as paid by the beneficiary where the income on which foreign income tax has been paid is included in the gross income of the beneficiary under this Act; or a beneficiary is treated as paid by the trustee where the income on which foreign income tax has been paid is taxed to the trustee under this Act. For the purposes of this section— “average rate of Ugandan income tax ”, in relation to a taxpayer for a year of income , means the percentage that the Ugandan income tax , before the foreign tax credit, is of the chargeable income of the taxpayer for the year and, in the case of a taxpayer with both foreign source business income and other income derived from foreign sources, the average rate of tax is to be calculated separately for both classes of income; “foreign income tax ” includes a foreign withholding tax , but does not include a foreign tax designed to raise the level of the tax on the income so that the taxation by the country of residence is reduced; and “net foreign source income” means the total foreign source income included in the gross income of the taxpayer , less any deductions allowed to the taxpayer under this Act that— (a) relate exclusively to the derivation of the foreign source income; and (b) in the opinion of the Commissioner General , may appropriately be related to the foreign source income.

Section Taxation of branch profits Section A tax shall be charged for each year of income and is imposed on every non- resident company carrying on business in Uganda through a branch which has repatriated income for the year of income . The tax payable by a non- resident company under this section is calculated by applying the rate prescribed in Part V of Schedule 4 to this Act to the repatriated income of the branch of the non- resident company for the year of income . The repatriated income of a branch for a year of income is calculated according to the following formula— A + (B - C) - D where— A is the total cost base of assets, net of liabilities, of the branch at the commencement of the year of income ; B is the net profit of the branch for the year of income calculated in accordance with generally accepted accounting principles; C is the Ugandan tax payable on the chargeable income of the branch for the year of income ; and D is the total cost base of assets, net of liabilities, of the branch at the end of the year of income . In calculating the repatriated income of a branch , the total cost base of assets at the end of a year of income is the total cost base of assets at the commencement of the next year of income . The tax imposed under this section is in addition to any tax imposed by this Act on the chargeable income of the branch under section 4 but is otherwise treated for all purposes of this Act as a tax on chargeable income .

Section Tax on international payments Section Interest paid by a resident company in respect of debentures is exempt from tax under this Act where the following conditions are satisfied— Subject to this Act, a tax is imposed on every non-resident person who derives any dividend , interest , royalty , rent , natural resource payment , agency fee in case of Islamic financial business or management charge from sources in Uganda. The tax payable by a non-resident person under this section is calculated by applying the rate prescribed in Part V of Schedule 4 to this Act to the gross amount of the dividend , interest , royalty , rent , natural resource payment , agency fee in case of Islamic financial business or management charge derived by a non-resident person . Notwithstanding section 78(m) a dividend derived by a non-resident person is only treated as income derived from sources in Uganda for the purposes of this section to the extent to which the dividend is paid out of profits sourced in Uganda. For the purposes of subsection (3) , where a resident company has profits sourced both within and outside Uganda, the company is treated as having paid a dividend out of the profits sourced in Uganda first. the debentures were issued by the company outside Uganda for the purpose of raising a loan outside Uganda; the debentures were widely issued for the purpose of raising funds for use by the company in a business carried on in Uganda or the interest is paid to a bank or a financial institution of a public character; and the interest is paid outside Uganda. Subsection (1) does not apply to an amount attributable to the activities of a branch of the non-resident in Uganda and such amount is subject to the operation of section 17 .

Section Tax on payments to non-resident public entertainers or sports persons Section The tax payable by a non-resident person under this section is calculated by applying the rate prescribed in Part V of Schedule 4 to this Act to the gross amount of— Subject to this Act, a tax is imposed on every non-resident entertainer, sports person or theatrical, musical or other group of non-resident entertainers or sports persons who derive income from any performance in Uganda. remuneration derived by a non-resident public entertainer or sports person ; or receipts derived by any theatrical, musical or other group of non-resident public entertainers or sports persons. Tax is imposed under this section on any group regardless of whether or not the performance is conducted for the joint account of all or some members of the group. Every member of a group shall be jointly and severally liable for payment of the tax imposed under this section and, subject to section 87(1)(c) , shall remit to the Commissioner General the tax due before leaving Uganda.

Section Tax on payments to non-resident contractors or professionals Section In this section, “Ugandan source services contract” means a contract, other than an employment contract, under which— Subject to this Act, a tax is imposed on every non-resident person deriving income under a Ugandan source services contract. The tax payable by a non-resident person under this section is calculated by applying the rate prescribed in Part V of Schedule 4 to this Act to the gross amount of any payment to a non-resident under a Ugandan source services contract. Subsection (1) does not apply to a royalty or management charge charged to tax under section 82 . the principal purpose of the contract is the performance of services which gives rise to income sourced in Uganda; and any goods supplied are only incidental to that purpose. For avoidance of doubt, income derived from the carriage of passengers who do not embark or cargo or mail which is not embarked in Uganda is not income derived from a Ugandan-source service contract.

Section Taxation of non-residents providing shipping, air transport or telecommunications services in Uganda Section Where a non-resident person carries on the business of transmitting messages by cable, radio, optical fibre, or satellite communication, or the business of providing internet connectivity services, the tax payable by the person shall be five percent of the gross amount derived by the person in respect of— Subject to this Act, a tax is imposed on every non-resident person carrying on the business of ship operator, charterer or air transport operator who derives income from the carriage of passengers who embark, or cargo or mail which is embarked in Uganda and on a road transport operator who derives income from the carriage of cargo or mail which is embarked in Uganda. The tax payable by a non-resident person under subsection (1) is calculated by applying the rate of tax prescribed in Part VI of Schedule 4 to this Act to the gross amount derived by the person from the carriage and is treated for all purposes of this Act as a tax on chargeable income . Subsection (1) does not apply to any income derived from the carriage of passengers who embark, or cargo or mail which is embarked, solely as a result of trans-shipment. the transmission of messages by apparatus established in Uganda; the provision of direct-to-home pay services to subscribers in Uganda; or the provision of internet connectivity services to subscribers in Uganda.

Section Taxation of non-residents providing digital services Section For the purposes of this section “digital service” includes— A tax is imposed on every non-resident person deriving income from providing digital services in Uganda to a customer in Uganda at the rate prescribed in paragraph 3 of Part V of Schedule 4 to this Act. For the purposes of subsection (1) , income is derived from providing a digital service in Uganda to a customer in Uganda, if the digital service is delivered over the internet, electronic network or an online platform. online advertising services; data services; services delivered through an online marketplace or intermediation platform, including an accommodation online marketplace, a vehicle hire online marketplace and any other transport online market place; digital content services, including accessing and downloading of digital content; online gaming services; cloud computing services; data ware housing; services, other than those services in this subsection, delivered through a social media platform or any internet search engine; and any other digital services as the Minister may prescribe by statutory instrument made under this Act. A non-resident person under this section shall lodge a tax return with the Commissioner General within fifteen days after the end of the tax period.

Section General provisions relating to taxes imposed under sections 82, 83, 84 and 85 Section The tax imposed on a non-resident person under sections 82 , 83 , 84 , 85(1) and 85(4) is a final tax on the income on which the tax has been imposed and— that income is not included in the gross income of the non-resident person who derives the income; no deduction is allowed for any expenditure or loss incurred by the non-resident person in deriving that income; and the liability of the non-resident person is satisfied if the tax payable has been withheld by a withholding agent under section 137 and paid to the Commissioner General under section 140 . In this section, “ withholding agent ” has the meaning in section 125 .

Section International agreements Section Except for a public listed company , where an international agreement concluded by the Government of Uganda with another contracting State provides that income derived by a person resident in such other contracting State from sources in Uganda is exempt from Ugandan tax or is subject to a reduction in the rate of Ugandan tax , the benefit of that exemption or reduction shall not be available to any person who— In this section, “international agreement” means— An international agreement entered into between the Government of Uganda and the government of a foreign country, or governments of foreign countries shall have effect as if the agreement was contained in this Act. To the extent that the terms of an international agreement to which Uganda is a party are inconsistent with the provisions of this Act apart from subsection (7) and Part XI which deals with tax avoidance or any other law of Uganda dealing with matters covered by this agreement the terms of the international agreement prevail over the provisions of this Act and any other law of Uganda dealing with matters covered by this agreement. Where an international agreement provides for reciprocal assistance in the collection of taxes and the Commissioner General has received a request from the competent authority of another country pursuant to that agreement for the collection from any person in Uganda of an amount due by that person under the income tax laws of that other country, the Commissioner General may, by notice in writing, require the person to pay the amount to the Commissioner General by the date specified in the notice for transmission to the competent authority of that other country. Where an international agreement provides for automatic exchange of information for tax purposes, the Commissioner General shall facilitate the automatic exchange of information, as may be prescribed. For the purposes of subsection (4) , the Minister may make regulations to provide for the automatic exchange of information for tax purposes. If a person fails to comply with a notice under subsection (3) , the amount in question may be recovered for transmission to the competent authority of that other country as if it were tax payable by the person under this Act. receives the income in a capacity which is other than that of a beneficial owner , who does not have full and unrestricted ability to enjoy that income and to determine its future uses; and does not possess economic substance in the country of residence. an agreement with a foreign government providing for the relief of international double taxation and the prevention of fiscal evasion; a bilateral or multilateral agreement with a foreign government or foreign governments or foreign organisation providing for administrative assistance in tax matters; or the Inter-Governmental Agreement on the East African Crude Oil Pipeline.

Section Substituted year of income Section A taxpayer may apply, in writing, to use as the taxpayer ’s year of income a substituted year of income being a twelve-month period other than the normal year of income ; and the Commissioner General may, subject to subsection (3) , by notice in writing, approve the application. A taxpayer granted permission under subsection (1) to use a substituted year of income may apply, in writing, to change the taxpayer ’s year of income to the normal year of income or to another substituted year of income ; and the Commissioner General , subject to subsection (3) , may, by notice in writing, approve the application. The Commissioner General may only approve an application under subsection (1) or (2) if the taxpayer has shown a compelling need to use a substituted year of income or to change the taxpayer ’s year of income , and any approval is subject to such conditions as the Commissioner General may prescribe. The Commissioner General may, by notice in writing to a taxpayer , withdraw the permission to use a substituted year of income granted under subsection (1) or (2) . A notice served by the Commissioner General under subsection (1) takes effect on the date specified in the notice, and a notice under subsection (2) or (4) takes effect at the end of the substituted year of income of the taxpayer in which the notice was served. Where the year of income of a taxpayer changes as a result of subsection (1) , (2) or (4) , the period between the last full year of income prior to the change and the date on which the changed year of income commences is treated as a separate year of income , to be known as the “ transitional year of income ”. In this Act, a reference to a particular normal year of income includes a substituted year of income or a transitional year of income commencing during the normal year of income . A taxpayer dissatisfied with a decision of the Commissioner General under subsection (1) , (2) or (4) may only challenge the decision under the objection and appeal procedure in Part VIII of the Tax Procedures Code Act. In this section, normal year of income ” means the period of twelve months ending on 30th June.

Section Method of accounting Section A taxpayer s method of accounting shall conform to generally accepted accounting principles. Subject to subsection (1) and unless the Commissioner General prescribes otherwise in a particular case, a taxpayer may account for tax purposes on a cash or accrual-basis. A taxpayer who intends to change the taxpayer ’s method of accounting shall apply, in writing, to the Commissioner General and the Commissioner General may, by notice in writing, approve the application where the Commissioner General is satisfied that the change is necessary to clearly reflect the taxpayer ’s income. A taxpayer dissatisfied with a decision under this section may only challenge the decision under the objection and appeal procedure in Part VIII of the Tax Procedures Code Act. If the taxpayer ’s method of accounting is changed, adjustments to items of income, deduction or credit or to other items shall be made in the year of income following the change, so that no item is omitted and no item is taken into account more than once.

Section Cash-basis taxpayer Section A taxpayer who is accounting for tax purposes on a cash-basis derives income when it is received or made available and incurs expenditure when it is paid.

Section Accrual-basis taxpayer Section A taxpayer who is accounting for tax purposes on an accrual basis— For the purposes of subsection (4) , economic performance occurs— derives income when it is receivable by the taxpayer ; and incurs expenditure when it is payable by the taxpayer . Subject to this Act, an amount is receivable by a taxpayer when the taxpayer becomes entitled to receive it, even if the time for discharge of the entitlement is postponed or the entitlement is payable by instalments. Notwithstanding subsection (2) , in the case of a diminishing partnership under Islamic financial business , an amount of the portion of the interest of the person offering Islamic financial business disposed of, is receivable by a taxpayer when the taxpayer becomes entitled to the instalment due in accordance with the partnership agreement. Subject to this Act, an amount is treated as payable by the taxpayer when all the events that determine liability have occurred and the amount of the liability can be determined with reasonable accuracy, but not before economic performance with respect to the amount occurs. Notwithstanding subsection (4) , in the case of a diminishing partnership under Islamic financial business , an amount of the portion of the interest of the person offering Islamic financial business disposed of, is payable by a taxpayer when the taxpayer becomes liable to pay the instalment due in accordance with the partnership agreement. [subsection (5) amended by section 7(a) of General Notice 2917 of 2024 ] with respect to the acquisition of services or property, at the time the services or property are provided; with respect to the use of property, at the time the property is used; or in any other case, at the time the taxpayer makes payment in full satisfaction of the liability.

Section Pre-payments Section Where a deduction is allowed for expenditure incurred on a service or other benefit which extends beyond thirteen months, the deduction is allowed proportionately over the years of income to which the service or other benefit relates.

Section Claim of right Section A taxpayer who is accounting for tax purposes on a cash-basis shall include an amount in gross income when received or claim a deduction for an amount when paid, notwithstanding that the taxpayer is not legally entitled to receive the amount or liable to make the payment , if the taxpayer claims to be legally entitled to receive or legally obliged to pay the amount. Where subsection (1) applies, the calculation of the chargeable income of the taxpayer shall be adjusted for the year of income in which the taxpayer refunds the amount received or recovers the amount paid. A taxpayer who is accounting for tax purposes on an accrual basis shall include an amount in gross income when receivable or claim a deduction for an amount when payable notwithstanding that the taxpayer is not legally entitled to receive the amount or liable to make the payment , if the taxpayer claims to be legally entitled to receive or legally obliged to pay the amount. Where subsection (3) applies, the calculation of the chargeable income of the taxpayer shall be adjusted for the year of income in which the taxpayer ceases to claim the right to receive the amount or ceases to claim an obligation to pay the amount.

Section Long-term contracts Section In the case of an accrual-basis taxpayer , income and deductions relating to a long-term contract are taken into account on the basis of the percentage of the contract completed during the year of income . The percentage of completion is determined by comparing the total costs allocated to the contract and incurred before the end of the year of income with the estimated total contract costs as determined at the time of commencement of the contract. Where, in the year of income in which a long-term contract is completed, it is determined that the contract has made a final year loss, the Commissioner General may allow the loss to be carried back to the preceding years of income and applied against an amount in gross income over the period of the contract under subsection (1) for those years, starting with the year immediately preceding the year in which the contract was completed. In this section— “final year loss”, in relation to a long-term contract, occurs where both the following conditions are satisfied— (a) the profit estimated to be made under the contract for the purposes of subsection (1) exceeds the actual profit, including a loss, made under the contract; and (b) the difference between the estimated profit and the actual profit exceeds the amount included in income under subsection (1) for the year of income in which the contract is completed, and the amount of the excess referred to in paragraph (b) of this subsection is the amount of the final year loss; and “long-term contract” means a contract for manufacture, installation or construction or, in relation to each, the performance of related services, which is not completed within the year of income in which work under the contract commenced, other than a contract estimated to be completed within six months of the date on which work under the contract commenced.

Section Trading stock Section The opening value of trading stock for a year of income is— A taxpayer is allowed a deduction for the cost of trading stock disposed of during a year of income . The cost of trading stock disposed of during a year of income is determined by adding to the opening value of trading stock for the year, the cost of trading stock acquired during the year, and subtracting the closing value of trading stock for the year. the closing value of trading stock at the end of the previous year of income ; or where the taxpayer commenced business during the year of income , the market value at the time of commencement of the business of trading stock acquired prior to the commencement of the business . The closing value of trading stock is the lower of cost or the market value of trading stock on hand at the end of the year of income . A taxpayer who is accounting for tax purposes on a cash­ basis may calculate the cost of trading stock on the prime-cost method or absorption-cost method; and a taxpayer who is accounting for tax purposes on an accrual-basis shall calculate the cost of trading stock on the absorption ­cost method. Where particular items of trading stock are not readily identifiable, a taxpayer may account for that trading stock on the first-in-first-out method or the average-cost method but, once chosen, a stock valuation method may be changed only with the written permission of the Commissioner General . In this section— “absorption-cost method” means the generally accepted accounting principle under which the cost of trading stock is the sum of direct material costs, direct labour costs and factory overhead costs; “average-cost method” means the generally accepted accounting principle under which trading stock valuation is based on a weighted average cost of units on hand; “direct labour costs” means labour costs directly related to the production of trading stock ; “direct material costs” means the cost of materials that become an integral part of the trading stock produced; “factory overhead costs” means the total costs of manufacturing except direct labour and direct material costs; “first-in-first-out method” means the generally accepted accounting principle under which trading stock valuation is based on the assumption that trading stock is sold in the order of its receipt; “prime-cost method” means the generally accepted accounting principle under which the cost of trading stock is the sum of direct material costs, direct labour costs and variable factory overhead costs; and “variable factory overhead costs” means those factory overhead costs which vary directly with changes in volume.

Section Debt obligations with discount or premium Section Subject to subsection (2) , interest in the form of any discount, premium or deferred interest shall be taken into account as it accrues. Where the interest referred to in subsection (1) is subject to withholding tax , the interest shall be taken to be derived or incurred when paid.

Section Foreign currency debt gains and losses Section Where— either— Subject to subsection (9) , a taxpayer derives a foreign currency debt gain if— Subject to subsection (9) , a taxpayer incurs a foreign currency debt loss if— Foreign currency debt gains are included in gross income and foreign currency debt losses are deductible only under this section. A foreign currency debt gain derived by a taxpayer during the year of income is included in the business income of the taxpayer for that year. Subject to subsections (4) and (6) , a foreign currency debt loss incurred by a taxpayer during a year of income is allowed as a deduction to the taxpayer in that year. A deduction is not allowed to a taxpayer for a foreign currency debt loss incurred by the taxpayer unless the taxpayer has notified the Commissioner General in writing of the existence of the debt which gave rise to the loss by the due date for furnishing of the taxpayer ’s return of income for the year of income in which the debt arose or by such later date as the Commissioner General may allow. Subsection (4) does not apply to a financial institution . a taxpayer has incurred a foreign currency debt loss under a transaction; the taxpayer or another person has derived a foreign currency debt gain under another transaction; and the transaction giving rise to the loss would not have been entered into, or might reasonably be expected not to have been entered into, if the transaction giving rise to the gain had not been entered into; or the transaction giving rise to the gain would not have been entered into, or might reasonably be expected not to have been entered into, if the transaction giving rise to the loss had not been entered into, where the taxpayer is a debtor, the amount in shillings of the foreign currency debt incurred by the taxpayer is greater than the amount in shillings required to settle the debt; or where the taxpayer is a creditor, the amount in shillings of the foreign currency debt owed to the taxpayer is less than the amount in shillings paid to the taxpayer in settlement of the debt. where the taxpayer is a debtor, the amount in shillings of the foreign currency debt incurred by the taxpayer is less than the amount in shillings required to settle the debt; or where the taxpayer is a creditor, the amount in shillings of the foreign currency debt owed to the taxpayer is greater than the amount in shillings paid to the taxpayer in settlement of the debt. In determining whether a taxpayer has derived a foreign currency debt gain or incurred a foreign currency debt loss, account shall be taken of the taxpayer ’s position under any hedging contract entered into by the taxpayer in respect of the debt. A foreign currency debt gain is derived, or a foreign currency debt loss is incurred by a taxpayer in the year of income in which the debt is satisfied. In this section— “foreign currency debt” means a business debt denominated in foreign currency; and “hedging contract” means a contract entered into by the taxpayer for the purpose of eliminating or reducing the risk of adverse financial consequences which might result for the taxpayer under another contract from currency exchange rate fluctuation.

Section Application of Part Section This Part applies for the purposes of determining the amount of any gain or loss arising on the disposal of an asset where the gain is included in the gross income , or the loss is allowed as a deduction under this Act.

Section Gains and losses on disposal of assets Section The amount of any gain arising from the disposal of an asset is the excess of the consideration received for the disposal over the cost base of the asset at the time of the disposal . The amount of any loss arising from the disposal of an asset is the excess of the cost base of the asset at the time of the disposal over the consideration received for the disposal . Where as a result of the application of this Act, a gain or loss on disposal of an asset is subject to tax being a gain or loss, the cost base of the asset is calculated on the basis that each item of cost or expense included in the cost base shall be determined according to the following formula— where— CB is the amount of an item of cost or expense incurred determined in accordance with section 50(2) ; CPID is the Consumer Price Index number published for the calendar month of sale; and CPIA is the Consumer Price Index number published for the month immediately prior to the date on which the relevant item of cost or expense was incurred. Subsection (3) shall not apply to an asset that is sold within twelve months from the date of purchase.

Section Disposals Section A taxpayer is treated as having disposed of an asset when the asset has been— Where the Commissioner General is satisfied that a taxpayer — Where a person to whom subsection (5) would otherwise apply— sold, exchanged, redeemed or distributed by the taxpayer ; transferred by the taxpayer by way of gift; or destroyed or lost. A disposal of an asset includes a disposal of a part of the asset. has converted an asset from a taxable use to non-taxable use; or has converted an asset from a non-taxable use to a taxable use, A non-resident person who becomes a resident person is deemed to have acquired all assets, other than taxable assets, owned by the person at the time of becoming a resident for their market value at that time. A resident person who becomes a non-resident person is deemed to have disposed of all assets, other than taxable assets, owned by the person at the time of becoming a non-resident for their market value at that time. intends, in the future, to re-acquire status as a resident person ; and provides the Commissioner General with sufficient security to satisfy any tax liability which would otherwise arise under subsection (5) , In this section, “taxable asset” means an asset the disposal of which would give rise to a gain included in the gross income of, or a loss allowed as a deduction to, a resident or non- resident taxpayer .

Section Cost base Section Subject to this Act, this section establishes the cost base of an asset for the purposes of this Act. The cost base of an asset purchased, produced or constructed by the taxpayer is the amount paid or incurred by the taxpayer in respect of the asset, including incidental expenditures of a capital nature incurred in acquiring the asset, and includes the market value at the date of acquisition of any consideration in kind given for the asset. Subject to subsection (4) , the cost base of an asset acquired in a non-arm’s length transaction is the market value of the asset at the date of acquisition. The cost base of an asset acquired in a transaction described in section 51 (2) is the amount of the consideration deemed by that subsection to have been received by the person disposing of the asset. Where a part of an asset is disposed of, the cost base of the asset shall be apportioned between the part of the asset retained and the part disposed of in accordance with their respective market values at the time of acquisition of the asset. Unless otherwise provided in this Act, expenditures incurred to alter or improve an asset which have not been allowed as a deduction are added to the cost base of the asset. Where the acquisition of an asset by a taxpayer represents the derivation of an amount included in gross income , the cost base of the asset is the amount included in gross income plus any amount paid by the taxpayer for the asset. Where the receipt of an asset represents the derivation of an amount which is exempt from tax , the cost base of the asset is the amount exempt from tax plus any amount paid by the taxpayer for the asset.

Section Special rules for consideration received Section Where an asset is disposed of to an associate or in a non-arm’s-length transaction, other than by way of transmission of the asset to a trustee or beneficiary on the death of a taxpayer , the person disposing of the asset, in this section referred to as the “disposer”, is treated as having received consideration equal to the greater of— The consideration received on disposal of an asset includes the market value at the date of the disposal of any consideration received in kind. the cost base of the asset to the disposer at the time of disposal ; or the fair market value of the asset at the date of disposal . Where two or more assets are disposed of in a single transaction and the consideration paid for each asset is not specified, the total consideration received is apportioned among the assets disposed of in proportion to their respective market values at the time of the transaction.

Section Non-recognition of gain or loss Section No gain or loss is taken into account in determining chargeable income in relation to— a transfer of an asset between spouses; a transfer of an asset between former spouses as part of a divorce settlement or a bona fide separation agreement; an involuntary disposal of an asset to the extent to which the proceeds are re-invested in an asset of a like kind within one year of the disposal ; the transmission of an asset to a trustee or beneficiary on the death of a taxpayer ; or capital gains arising from the sale of investment interest of a registered venture capital fund if at least fifty percent of the proceeds on sale is reinvested within the year of income . Notwithstanding subsection (1)(e) , a registered venture capital fund shall be entitled to a non-recognition of a gain or loss equivalent to the percentage of reinvested proceeds. Where no gain or loss is taken into account as a result of subsection (1)(a) , (b) or (d) , the transferred or transmitted asset is deemed to have been acquired by the transferee, or trustee or beneficiary as an asset of the same character for a consideration equal to the cost base of the asset to the transferor or deceased taxpayer at the time of the disposal . The cost base of a replacement asset described in subsection (1)(c) is the cost base of the replaced asset plus the amount by which any consideration given by the taxpayer for the replaced asset exceeds the amount of proceeds received on the involuntary disposal .

Section Income of joint owners Section Income or deductions relating to jointly owned property are apportioned among the joint owners in proportion to their respective interests in the property. Where the interest of joint owners in jointly owned property cannot be ascertained, the interest of the joint owners in the property shall be deemed to be equal. For avoidance of doubt, subsections (1) and (2) shall apply to takaful participants.

Section Valuation Section For the purposes of this Act and subject to section 19(1)(b) , the value of benefit in kind is the fair market value of the benefit on the date the benefit is taken into account for tax purposes. The fair market value of a benefit is determined without regard to any restriction on transfer or to the fact that it is not otherwise convertible to cash.

Section Other methods of allocating costs and revenue Section In determining the chargeable income of a person , use of input-output ratios and other methods of allocating costs and revenue may be applied.

Section Currency conversion Section Chargeable income under this Act shall be calculated in Uganda shillings. Where an amount taken into account under this Act is in a currency other than the Uganda shilling, the amount shall be converted to the Uganda shilling at the Bank of Uganda mid-exchange rate applying between the currency and the Uganda shilling on the date that the amount is derived, incurred or otherwise taken into account for tax purposes. With the prior written permission of the Commissioner General , a taxpayer may use the average rate of exchange during the year of income or may keep books of accounts in a currency other than the Uganda shilling.

Section Indirect payments and benefits Section The income of a person includes— a payment that directly benefits the person ; and a payment dealt with as the person directs,

Section Finance leases Section Where a lessor leases property to a lessee under a finance lease, for the purposes of this Act— A lease of property is a finance lease if— the lessee is treated as the owner of the property; and the lessor is treated as having made a loan to the lessee, in respect of which payments of interest and principal are made to the lessor equal in amount to the rental payable by the lessee. The interest component of each payment under the loan is treated as interest expense incurred by the lessee and interest income derived by the lessor. the lease term exceeds seventy-five percent of the effective life of the leased property; the lessee has an option to purchase the property for a fixed or determinable price at the expiration of the lease; or the estimated residual value of the property to the lessor at the expiration of the lease term is less than twenty percent of its fair market value at the commencement of the lease. For the purposes of subsection (3) , the lease term includes any additional period of the lease under an option to renew.

Section Exclusion of doctrine of mutuality Section A company which carries on a member’s club, a trade association or a mutual insurance company is treated for the purposes of this Act as carrying on a business subject to tax . The business income of a company to which subsection (1) applies includes entrance fees and subscriptions paid by members. Where a company referred to in subsection (1) is operated primarily to furnish goods or services to members, deductions attributable to the furnishing of goods or services to members are allowed only to the extent of the total income derived from the members, with any excess carried forward and allowed as a deduction in the following year of income . In this section, “members club” means a club or similar institution all the assets of which are owned by or are held in trust for the members of the club or institution.

Section Compensation receipts Section A compensation payment derived by a person takes the character of the item that is compensated.

Section Recouped expenditure Section Where a previously deducted expenditure, loss or bad debt is recovered by the taxpayer , the amount recovered is deemed to be income derived by the taxpayer in the year of income in which it is recovered and takes the character of the income to which the deduction related. For the purposes of subsection (1) , a deduction is considered recovered upon the occurrence of an event which is inconsistent with the basis for the deduction.

Section Taxation of individuals Section The chargeable income of each taxpayer who is an individual is determined separately.

Section Income splitting Section A taxpayer is treated as having attempted to split income where— Where a taxpayer attempts to split income with another person , the Commissioner General may adjust the chargeable income of the taxpayer and the other person to prevent any reduction in tax payable as a result of the splitting of income. the taxpayer transfers income, directly or indirectly, to an associate ; or the taxpayer transfers property, including money, directly or indirectly, to an associate with the result that the associate receives or enjoys the income from that property, In determining whether the taxpayer is seeking to split income, the Commissioner General shall consider the value, if any, given by the associate for the transfer.

Section Interpretation of Part Section In this Part, unless the context otherwise requires— “ commercial production ” means— (a) for mining operations , the first period of thirty consecutive days during which the average level of production of the twenty-five highest production days in the thirty-day period reaches a production level deemed to be commercial as determined by the Minister responsible for mining operations ; and (b) for petroleum operations, the production of crude oil or natural gas, or both, and delivery of the crude oil or natural gas at the delivery point under a programme of regular production and sale; “ contract area ” means the area described and shown in a petroleum agreement on the effective date of the agreement; and where any part of the area is relinquished under the petroleum agreement , the whole or any part of such area which at any particular time remains subject to the petroleum agreement ; “ contractor ” means a person who supplies services or goods, other than as an employee , to the following— (a) a licensee in respect of mining operations undertaken by the licensee ; (b) a licensee in respect of petroleum operations undertaken by the licensee ; “ cost oil ” means a licensee ’s entitlement to production as cost recovery under a petroleum agreement ; “ delivery point ” means the point at which petroleum passes through the intake valve of the pipeline, vessel, vehicle or craft at a terminal or refinery in Uganda; “ farm-out agreement ” is an agreement to which section 101 applies; “ gross income of a licensee ” includes cost oil , licensee ’s share of profit oil and any credits earned by the licensee from petroleum operations; “ licence area ” means the area that is the subject of a mining right ; “ licensee ” means a person who has been granted a mining right or a person with whom the Government has entered into a petroleum agreement as defined in the Petroleum (Exploration, Development and Production) Act or a person licensed under the Petroleum (Refining, Conversion, Transmission and Midstream Storage) Act; “ mining exploration expenditure ” means expenditure incurred by a licensee in undertaking mining exploration operations , and includes the following— (a) expenditure incurred in acquiring— (i) an interest in a mining exploration right from the Government or under a farm-out agreement ; or (ii) mining exploration information from the Government or under a farm-out agreement ; (b) social infrastructure expenditure incurred in accordance with a mining exploration right ; (c) expenditure incurred to acquire a depreciable asset that is first used in mining exploration operations ; “ mining extraction expenditure ” means capital expenditure incurred by a licensee in undertaking operations authorised under a mining lease, other than expenditure incurred to acquire a depreciable asset , and includes the following— (a) expenditure whenever incurred in acquiring— (i) an interest in a mining right , other than an interest referred to in paragraph (a)(i) of the definition of “ mining exploration expenditure ”; or (ii) mining information , other than information referred to in paragraph (a)(ii) of the definition of “ mining exploration expenditure ”; (b) social infrastructure expenditure incurred in accordance with a mining lease; “ mining exploration information ” means information relating to the search for minerals under a mining exploration right ; “ mining exploration operations ” means authorised operations under a mining exploration right ; “ mining exploration right ” means a prospecting, exploration or retention licence granted under the Mining and Minerals Act; “ mining extraction operations ” means authorised operations under a mining lease; “ mining information ” means information relating to mining operations ; “ mining operations ” means authorised operations under a mining right ; “ mining revenues ” means signature and other bonuses, surface rentals, royalties, and any other duties or fees payable to the Government under the Mining and Minerals Act or a mining right granted under that Act; “ mining right ” means a mining exploration right , or a mining lease; “ non-resident associate ”, in relation to a licensee , means an associate of the licensee that is a non-resident person ; “ non-resident contractor ” means a contractor that is not a resident person ; “ participation dividend ”, in relation to a resident licensee , means a dividend paid by the licensee to a non- resident company that has a ten percent or greater voting interest in the voting power of the licensee ; “ petroleum agreement ” means an agreement entered into by the Government of Uganda with another person in accordance with the Petroleum (Exploration, Development and Production) Act or the Petroleum (Refining, Conversion, Transmission and Midstream Storage) Act; “ petroleum development expenditure ” means expenditure incurred by a licensee in undertaking operations authorised under a petroleum production licence; “ petroleum development operations ” means authorised operations under a petroleum production licence; “ petroleum exploration expenditure ” means expenditure incurred by a licensee in undertaking exploration operations authorised under a petroleum exploration right; “ petroleum exploration operations ” means an authorised operation under a petroleum exploration right; “ petroleum operation ” means a petroleum activity as defined in the Petroleum (Exploration, Development and Production) Act; “ petroleum revenues ” has the meaning assigned to it in section 2 of the Public Finance Management Act; “ petroleum right ” means a reconnaissance permit, petroleum exploration right, or a petroleum production licence; “ prescribed licensee ” means— (a) a person who has been granted a mining right and, in respect of whom, the Commissioner General has notified in writing to be a prescribed licensee; or (b) a person with whom the Government has entered into a petroleum agreement ; “ resident licensee ” means a licensee that is a resident company ; “ service fee ” includes an amount treated as a royalty in the definition of “ royalty ” in section 2 ; “ social infrastructure expenditure ” means capital expenditure that a licensee is required to incur under a mining right or petroleum agreement on the construction of a public school, public hospital, public road, or similar social infrastructure. Unless the context otherwise requires, any term that is not defined in this Act but is defined in the Mining and Minerals Act or in the Petroleum (Exploration, Development and Production) Act as the case may be, has the same meaning as in the Mining and Minerals Act or in the Petroleum (Exploration, Development and Production) Act. If more than one person has signed a petroleum agreement , each person is treated as a licensee for the purposes of this Part. An amount is not treated as “ mining exploration expenditure ”, “ mining extraction expenditure ”, “ petroleum exploration expenditure ”, or “ petroleum development expenditure ” to the extent that the amount is not allowed as a deduction under section 22(3) or 23 .

Section Transactions between associates Section In any transaction between associates or persons who are in an employment relationship, the Commissioner General may distribute, apportion or allocate income, deductions or credits between the associates or persons who are in an employment relationship, as the case may be, as is necessary to reflect the chargeable income realised by the taxpayer in an arm’s length transaction. The Commissioner General may adjust the income arising in respect of any transfer or licence of intangible property between associates so that it is commensurate with the income attributable to the property. In making any adjustment under subsection (1) or (2) , the Commissioner General may determine the source of income and the nature of any payment or loss as revenue, capital or otherwise.

Section Re-characterisation of income and deductions Section For the purposes of determining liability to tax under this Act, the Commissioner General may— re-characterise a transaction or an element of a transaction that was entered into as part of a tax avoidance scheme; disregard a transaction that does not have substantial economic effect; or re-characterise a transaction the form of which does not reflect the substance. A “ tax avoidance scheme” in subsection (1) includes any transaction one of the main purposes of which is the avoidance or reduction of liability to tax .

Section Rental tax Section An individual charged to tax under section 5 shall furnish a return of rental income for each year of income not later than six months after the end of that year. Sections 118 and 123 apply, with necessary modifications, to the tax imposed under section 5 . For the avoidance of doubt, the Commissioner General shall prescribe the form for return of rental income under this section.

Section Interpretation of Part Section In this Part— “ payee ” means a person receiving payments from which tax is required to be withheld under this Part; and “ withholding agent ” means a person obliged to withhold tax under this Part.

Section Withholding of tax by employers Section Every employer shall withhold tax from a payment of employment income to an employee as prescribed by regulations made under section 151 . The obligation of an employer to withhold tax under subsection (1) is not reduced or extinguished because the employer has a right, or is otherwise under an obligation, to deduct and withhold any other amount from such payments. The obligation of an employer to withhold tax under subsection (1) applies notwithstanding any other law which provides that the employment income of an employee shall not be reduced or subject to attachment.

Section Payment of interest to resident persons Section This section does not apply to— In this section, “associated company ”, in relation to a company , in this subsection referred to as the “payer company ”, means— Subject to subsection (2) , a resident person who pays interest to another resident person shall withhold tax on the gross amount of the payment at the rate prescribed in Part IX of Schedule 4 to this Act. interest paid by a natural person ; interest , other than interest from Government securities, paid to a financial institution ; interest paid by a company to an associated company ; or interest paid which is exempt from tax in the hands of the recipient. a company in which the payer company controls fifty percent or more of the voting power in the company either directly or through one or more interposed companies; a company which controls fifty percent or more of the voting power in the payer company either directly or through one or more interposed companies; or a company , in this subsection referred to as the “ payee company ”, where another company controls fifty percent of the voting power in the payee and payer companies either directly or through one or more interposed companies.

Section Payment of dividends to resident shareholders Section A resident company which pays a dividend to a resident shareholder shall withhold tax on the gross amount of the payment at the rate prescribed in Part IX of Schedule 4 to this Act. This section does not apply where the dividend income is exempt from tax in the hands of the shareholder.

Section Withholding tax from professional fees Section A resident person who pays management fees, agency fees in case of Islamic financial business , or professional fees to a resident person shall withhold tax on the gross amount of the payment at the rate prescribed in Part X of Schedule 4 to this Act. This section does not apply to a resident person whom the Commissioner General is satisfied has regularly complied with the obligations imposed on that person under this Act.

Section Withholding tax by purchaser of asset Section A resident person who purchases an asset from a non-resident person shall withhold tax on the gross amount of the payment at the rate prescribed in Part X of Schedule 4 to this Act. A resident person who purchases a business or business asset shall withhold tax at a rate specified in Part X of Schedule 4 to this Act.

Section Withholding of tax on payments for winnings of betting Section A person who makes payment for winnings of betting shall withhold tax on the gross amount of the payment at the rate prescribed in Part XI Schedule 4 to this Act.

Section Withholding tax on payments of re-insurance or re-takaful premiums Section Subsection (1) does not apply to re-insurance or re- takaful services provided by— A resident person who makes a payment of premium for reinsurance or re- takaful services to a non-resident person shall withhold tax on the gross amount of the payment at a rate prescribed in Part XII of Schedule 4 to this Act. Uganda Reinsurance Company Limited; African Reinsurance Corporation; or PTA Reinsurance Company. Reference to premium under this section shall have the same meaning as contribution in the case of re- takaful business .

Section Withholding tax on commission paid by telecommunications service providers on airtime distribution and mobile money Section A telecommunications service provider who makes a payment of a commission for airtime distribution or provision of mobile money services shall withhold tax on the gross amount of the payment at the rate prescribed in Part XIII of Schedule 4 to this Act.

Section Withholding of tax on commission paid to insurance agent Section An insurance service provider who makes a payment of a commission to an insurance agent shall withhold tax on the gross amount of the payment at the rate prescribed in Part XIV of Schedule 4 to this Act.

Section Withholding of tax on commission paid to advertising agent Section A person who makes payment for a commission to an advertising agent shall withhold tax on the gross amount of the payment at the rate prescribed in Part XIV of Schedule 4 to this Act.

Section Payment for goods and services Section Where the Government of Uganda, a Government institution, a local authority , any company controlled by the Government of Uganda, or any person designated in a notice issued by the Minister , in this section referred to as the “payer”, pays an amount or amounts in aggregate exceeding one million shillings to any person in Uganda— Where— This section does not apply to— a supplier or importer— for a supply of goods or materials of any kind; or for a supply of any services, there are separate supplies of goods or materials, or of services and each supply is made for an amount of one million shillings or less; and it would reasonably be expected that the goods or materials, or services would ordinarily be supplied in a single supply for an amount exceeding one million shillings, Every person who imports goods into Uganda is liable to pay tax at the time of importation on the value of the goods at the rate prescribed in Part X of Schedule 4 to this Act. The value of goods under subsection (3) shall be the value of the goods ascertained for the purposes of customs duty under the laws relating to customs. importations by organisations within the definition of “ exempt organisation ” in section 2(a)(ii) of that definition; who is exempt from tax under this Act; or who the Commissioner General is satisfied has regularly complied with the obligations imposed on the supplier or importer under this Act; and agricultural supplies. The tax paid under subsections (1) and (3) is treated as tax withheld for the purposes of section 146 .

Section International payments Section Any promoter, agent or similar person — Any person making a payment of the kind referred to in section 82 , 84 or 85 shall withhold from the payment the tax levied under the relevant section. paying remuneration to a non-resident entertainer or sportsperson; or responsible for collecting the gross receipts from a performance in Uganda by a theatrical, musical or other group of non-resident entertainers or sportspersons, This section does not apply where the payment is exempt from tax .

Section Non-resident services contract Section Every person who enters into an agreement with a non-resident for the provision of services by the non-resident which services give rise to income sourced in Uganda shall, within thirty days of the date of entering into such agreement, notify the Commissioner General in writing of— the nature of such agreement; the likely duration of the agreement; the name and postal address of the non-resident person to whom payments under the agreement are to be made; and the total amount estimated to be payable under the agreement to the non-resident person . The Commissioner General may, by notice in writing served on the person who has notified the Commissioner General under subsection (1) , require that person to withhold tax from any payment made under the agreement at the rate specified by the Commissioner General in the notice. Subsection (2) does not apply to a contract to which section 84 applies. A person who fails to notify the Commissioner General in accordance with subsection (1) is personally liable to pay to the Commissioner General the amount of tax that the non-resident is liable for on the income arising under the contract, but the person is entitled to recover this amount from the non-resident. The provisions of this Act relating to the collection and recovery of tax apply to the liability imposed by subsection (1) as if it were tax .

Section Withholding as final tax Section Where— tax has been withheld under section 127 on a payment of interest on treasury bills or other Government securities by the Bank of Uganda to any person or by a financial institution to a resident individual , other than in the capacity of trustee , resident retirement fund or to an exempt organisation ; tax has been withheld under section 133 on a payment of commission for airtime distribution or provision of mobile money services to a resident individual ; or tax has been withheld under section 128 on a payment of dividends to a resident individual ; the withholding tax is a final tax , and— no further tax liability is imposed upon the taxpayer in respect of the income to which the tax relates; that income is not aggregated with the other income of the taxpayer for the purposes of ascertaining chargeable income ; no deduction is allowed for any expenditure or losses incurred in deriving the income; and no refund of tax shall be made in respect of the income.

Section Payment of tax withheld Section Subject to subsection (2) , a withholding agent shall pay to the Commissioner General any tax that has been withheld or that should have been withheld under this Part within fifteen days after the end of the month in which the payment subject to withholding tax was made by the withholding agent . Where a person withholds or should have withheld tax as required under section 137(2) , the tax shall be paid to the Commissioner General within five days of the performance or by the day before the date the non-resident leaves Uganda, whichever is the earlier. The provisions of this Act relating to the collection and recovery of tax apply to any amount withheld under this Part as if it were tax .

Section Advance tax for transport services Section A taxpayer who provides a passenger transport service or a freight transport service where the goods vehicle used has a loading capacity of at least two tonnes shall pay an advance tax at the rates specified in Part II of Schedule 3 to this Act. A taxpayer who provides a passenger transport service or a freight transport service under subsection (1) , shall be required to obtain a tax clearance certificate from the Commissioner General in accordance with section 50 of the Tax Procedures Code Act before renewal of operational licences.

Section Failure to withhold tax Section A withholding agent who fails to withhold tax in accordance with this Act is personally liable to pay to the Commissioner General the amount of tax which has not been withheld, but the withholding agent is entitled to recover this amount from the payee . The provisions of this Act relating to the collection and recovery of tax apply to the liability imposed by subsection (1) as if it were tax .

Section Tax credit certificates Section Subject to subsection (3) , a withholding agent shall deliver to the payee a tax credit certificate setting out the amount of payments made, and tax withheld during a year of income . A payee who is required to furnish a return of income shall attach to the return the tax credit certificate or certificates supplied to the payee for the year of income for which the return is filed. A withholding agent shall at the end of each year of income deliver to the employee , to whom section 4(4) applies, a certificate setting out the amount of tax withheld during a year of income .

Section Record of payments and tax withheld Section A withholding agent shall maintain, and keep available for inspection by the Commissioner General , records showing, in relation to each year of income — payments made to a payee ; and tax withheld from those payments. The records referred to in subsection (1) shall be kept by the withholding agent for five years of income after the end of the year of income to which the records relate. The Commissioner General may call upon a withholding agent to allow an auditor to examine the records of the agent to verify their accuracy against the tax credit certificates of the agent.

Section Priority of tax withheld Section Tax withheld by a withholding agent under this Act— Every amount which a withholding agent is required under this Act to withhold from a payment is— is held by the withholding agent in trust for the Government of Uganda; and is not subject to attachment in respect of a debt or liability of the withholding agent , a first charge on that payment ; and withheld prior to any other deduction which the withholding agent may be required to make by virtue of an order of any court or any other law.

Section Adjustment on assessment and withholding agent’s indemnity Section The amount of tax withheld under this Part is treated as income derived by the payee at the time it was withheld. A withholding agent who has withheld tax under this Part and remitted the amount withheld to the Commissioner General is treated as having paid the withheld amount to the payee for the purposes of any claim by that person for payment of the amount withheld. Tax withheld from a payment under this Part is deemed to have been paid by the payee and, except in the case of a tax that is a final tax under this Act, is credited against the tax assessed on the payee for the year of income in which the payment is made. Where the tax withheld under this Part for a year of income , together with any provisional tax paid under section 121 for that year, exceeds the liability under an assessment of the taxpayer for that year, the excess shall be dealt with by the Commissioner General in accordance with section 123(3) . Where a person who pays tax in accordance with section 136(3) is an individual whose only source of income is employment income , the tax shall be refunded on application by that person in accordance with section 123 .

Section Business information returns Section Every person carrying on business in Uganda who makes a payment of income sourced in Uganda, being services income, interest , royalties, management fees or other income specified by the Commissioner General shall furnish a return of such payments, in this section referred to as a “ business information return”, to the Commissioner General within sixty days after the end of the year of income in which the payment was made. A business information return shall be in the form specified by the Commissioner General and shall state the information required. Subsection (1) does not apply to the payment of any income subject to withholding of tax at source under Part XIV of this Act, other than employment income . Notwithstanding subsection (1) , a person required to withhold tax under section 126 shall furnish a withholding tax return for every month in the form specified by the Commissioner General , not later than fifteen days after the end of the month to which the withholding tax relates for all employees liable to tax . A withholding agent who makes a payment subject to withholding tax under section 82 to 85 and section 127 to 136 shall furnish a return of withholding tax for every month in the form specified by the Commissioner General not later than fifteen days after the end of every month to which withholding tax relates.

Section Interest on unpaid tax Section A person who fails— to pay any tax , including provisional tax ; to pay any penal tax ; or to pay to the Commissioner General any tax withheld or required to be withheld by the person from a payment to another person , Interest paid by a person under subsection (1) shall be refunded to the person to the extent that the tax to which the interest relates is found not to have been due and payable. Where good cause is shown, in writing, by the person liable for payment of interest , the Minister may, on the advice of the Commissioner General , remit, in whole or in part, any interest charged under this section. Interest charged in respect of a failure to comply with section 140 is borne personally by the withholding agent , and no part of it is recoverable from the person who received the payment from which tax was or should have been withheld under Part XIV of this Act. Interest charged under this section shall be simple interest . The provisions of this Act relating to the collection and recovery of tax apply to any interest charged under this section as if it were tax due. The interest due and payable under subsection (1) , which exceeds the aggregate of the principal tax , and the penal tax shall be waived.

Section Interpretation of Part Section In this Part, “repealed legislation” means the Income Tax Decree, 1974, amendments to it and subsidiary legislation made under it and section 25 of the Investment Code, 1991.

Section Re-characterisation of arrangements under Islamic financial business Section For purposes of determining liability to tax under this Act, the Commissioner General may re-characterise an arrangement under Islamic financial business not provided for under this Act, to the equivalent arrangement under conventional financial services for purposes of reflecting the equivalent economic substance, other than the form. The Commissioner General shall comply with Shari’ah principles in re-characterising an arrangement under Islamic financial business not provided for under this Act.

Section Regulations Section Without prejudice to the general effect of subsection (1) , regulations made under that subsection may— The Minister may, by statutory instrument, make regulations for better carrying into effect the purposes of this Act. contain provisions of a saving or transitional nature consequent on the making of this Act; or prescribe penalties for the contravention of the regulations not exceeding a fine of twenty-five currency points or imprisonment not exceeding six months, or both, and may prescribe, in the case of continuing offences, an additional fine not exceeding five currency points in respect of each day on which the offence continues.

Section Power to amend monetary amounts and Schedules Section The Minister may, by statutory instrument, with approval of Parliament, amend any monetary amount set out in this Act and the Schedules to this Act. [section 152 substituted by section 7(c) of General Notice 2917 of 2024 ]

Section Application of certain laws, etc. Section For the purpose of applying subsections (5) to (12) to a taxpayer permitted to use a substituted year of income for the first year of income under this Act— Where an exemption referred to in subsection (19) expires, the following provisions apply to the holder of the certificate of incentives— Subject to subsection (23) , where the income of a person is wholly or partly exempt from tax under— The repealed legislation shall continue to apply to the years of income prior to the year of income in which this Act came into force. Any arrangement between the Government of Uganda and the Government of a foreign country with a view to affording relief from double taxation made under section 47 of the Income Tax Decree, 1974, or its predecessor and which is still in force on 1st July, 1997, shall continue to have effect under this Act. A reference in this Act to a previous year of income includes, where the context requires, a reference to a year of income under the repealed legislation. Section 3(1)(d) of the Income Tax Decree, 1974, shall continue to apply to an amount referred to in section 21(1)(h) of this Act if the payer of the alimony, allowance or maintenance obtained a deduction for the payment under the Income Tax Decree, 1974, prior to the commencement of this Act. Sections 18(1)(a) and 22(1)(b) do not apply to business assets of a capital nature disposed of before 1st April, 1998, or to business debts of a capital nature cancelled or satisfied before 1st April, 1998. Where, as a result of the application of this Act, a gain or loss on realisation of a liability is subject to tax being a gain or loss which would not otherwise have been subject to tax , the value of the liability on 31st March, 1998, shall be used in the calculation of any income or deduction as from that date. Subject to subsections (8) and (9) , where, as a result of the application of this Act, a gain or loss on disposal of an asset is subject to tax being a gain or loss that would not otherwise have been subject to tax , the cost base of the asset is calculated on the basis that each item of cost or expense included in the cost base and which was incurred prior to that date is determined using the following formula— where— CB is the amount of an item of cost or expense incurred on or before 31st March, 1998, included in the cost base of the asset; CPI D is the Consumer Price Index number published for the month ending on 31 st March, 1998; and CPI A is the Consumer Price Index number published for the month immediately prior to the date on which the relevant item of cost or expense was incurred. Where the taxpayer is able to substantiate the market value of an asset on 31st March, 1998, the taxpayer may substitute that value for the cost base determined under subsection (7) . Where the asset referred to in subsection (8) is immovable property , the cost base of the property as at 31st March, 1998, is equal to the market value of the property as determined by the Chief Government Valuer. Section 27(4)(b) shall apply to depreciable assets acquired by a taxpayer before 1st July, 1997, and held by the taxpayer at that date on the basis that the cost base of the asset is the cost of the asset less any depreciation deductions allowed under the repealed legislation in respect of that cost. For the purposes of section 28(6) , the “residue of expenditure” of an industrial building at 30 th June, 1997, shall be the residue of expenditure as determined under the Income Tax Decree, 1974, at that date. The amount of a deduction allowed to a taxpayer under section 36 for the year of income commencing on 1 st July, 1997, shall be determined under section 14(4) of the Income Tax Decree, 1974. The amount of a deduction allowed under sections 30 and 31 in respect of start-up costs incurred or intangible assets acquired before this Act came into force shall be calculated on the assumption that those sections had always applied. the reference in those subsections to 31 st March, 1998, is treated as a reference to the day immediately preceding the commencement of the first year of income of the taxpayer under this Act; and the reference in those subsections to 1 st April, 1998, is treated as a reference to the first day of the first year of income of the taxpayer under this Act. A taxpayer entitled to use a substituted year of income under the Income Tax Decree, 1974, is permitted to continue to use that period as the taxpayer ’s substituted year of income under this Act until the Commissioner General decides otherwise by notice in writing to the taxpayer . Where a taxpayer subject to tax under this Act but who was not subject to tax under the Income Tax Decree, 1974, is entitled to use a substituted year of income , the taxpayer is treated for the purposes of section 37(6) as having a transitional year of income for the period 1st July, 1997, to the end of the day immediately preceding the start of the first substituted year of income after that date. Finance leases, as defined in section 58 , entered into before 1st July, 1997 shall be dealt with in terms of the Income Tax Decree, 1974. A reference in section 61 to a previously deducted expenditure, loss or bad debt includes a reference to an expenditure, loss or bad debt deducted under the repealed legislation. Notwithstanding the repeal of section 25 of the Investment Code, 1991, the holder of a certificate of incentives which is valid at the commencement of this Act may make an election in writing to the Commissioner General by 31st December, 1997, for the exemption from tax on corporate profits and the exemption from withholding tax paid on dividends and interest paid to resident persons as provided under section 25 of the Investment Code, 1991 to continue until the exemption expires in accordance with that section, as if that section had not been repealed. subsections (5) to (8) apply to the person on the basis that the reference in those subsections to 31st March, 1998 is treated as a reference to the day on which the exemption expired; the amount of the deduction allowed under sections 27 , 28 , 29 and 30 in respect of depreciable assets, industrial buildings, or intangible assets acquired, or start-up costs incurred, before the exemption expired shall be calculated on the assumption that those sections had always applied; and the amount of any assessed loss to be deducted in the first year of income after the exemption has expired is calculated on the basis that this Act and its predecessor has always applied to the person . Notwithstanding the repeal of section 25 of the Investment Code, 1991, and without prejudice to other relevant provisions of this section, an investor who, immediately before the commencement of this Act, holds a valid investment licence under the Investment Code, 1991, and who but for this Act would be eligible for the grant of a certificate of incentives and whose application had been approved for a certificate of incentives, shall be issued with the certificate in accordance with the Investment Code, 1991, as if section 25 of the Code had not been repealed. a notice in the Gazette under section 12(2) of the Income Tax Decree, 1974; or a provision in any agreement, Subsection (22) does not apply where the exemption is provided for in an agreement between the Government of Uganda and a foreign government or the United Nations or a specialised agency of the United Nations.