Lex Africa Guide 2012 Full - Afrer.org

82created by the company;a list of the shareholders of the company;a letter from the Registrar of Companies from the headoffice of the company confirming that the company isregistered in the home country;the names and postal addresses of someone resident inUganda authorized to accept service of court process andany notices required to be served on the company;the full address of the principal /registered office of thecompany;official registration and processing fees.TaxationBoth direct and indirect taxes apply in Uganda. Direct taxes arelevied on individual and corporate income. Indirect taxes arelevied on certain transactions such as sale and purchase of land,goods and services.Income TaxIncome tax is payable by individuals. It is calculated on theindividual's net assessable income after making allowance fordeductible expenses. The sources of assessable income forindividuals include employment, business and property. Theannual income threshold is Ushs1 560 000.Different tax rates apply depending on whether the individual isa resident or non- resident of Uganda for tax purposes.Income Tax Annual Rates for ResidentsTaxable Income (Ushs per annum) Rate (%)1. 0 – 1 560 000 02. 1 560 001 – 2 820 000 103. 2 820 001 – 4 920 000 204. Over 4 920 001 30Income Tax Annual Rates for Non- ResidentsTaxable Income (Ushs per annum) Rate (%)1. 0 – 2 820 000 102. 2 820 001– 4 920 000 203. Over 4 920 001 30Pay as You Earn (PAYE) Tax and Taxation of EmploymentBenefitsPAYE is not a separate tax but is an instalment income tax systemunder which employers are required to deduct tax instalmentsfrom their employees' salary or other employment income. Theinstalments so deducted are remitted to the Uganda RevenueAuthority (URA) and based on the PAYE tax return lodged by theemployer, the employee offsets the total amount deducted fromthe individual employee against the employees’ tax liability atthe end of the tax year. Every employer must, therefore, registerfor PAYE as well as be familiar with the rules relating to filing PAYEreturns and the computation of PAYE.Taxation of Companies and other Business EntitiesA corporate tax is levied on companies, partnerships and soleproprietorships. Any income arising out ofany trade, profession, vocation or venture inthe nature of trade is taxable under specialrules applicable to business entities.The income of all companies accruing orderived from Uganda is taxable. The sources of income on whichtax can be levied include profits and gains from any businesscarried on for whatever period of time. Other sources includedividends from shares in other companies and interest from theuse of the company's property.Income Tax Rate1. Resident and Non Resident Companies 30%2. Branch tax 30%3. Branch profit remittance tax 15%4. Capital gains tax 30%5. Mining Companies 25-45%Taxation of PartnershipsIncome tax assessments for a partnership can be made either inrespect of the individual partners or in the partnership's name.The profits of a partnership, including a firm carrying on a tradeor profession, are taxable.Taxation of Sole ProprietorshipsA sole proprietor is taxed in the same way as an individual.Taxation of TrustsThe income tax rate applicable to trusts is 30% of the chargeabletrust income for the tax year. A trust is exempt from income taxwhere its income is paid directly to the beneficiary withoutpassing through the hands of the trustee or where a share or partof the trust's income accrues or arises for the benefit of thebeneficiary.Value Added Tax (VAT)VAT is a consumer expenditure tax payable by individuals andfirms. The business sales turnover threshold for VAT is Ushs50 000 000 (approx. USD 28 000) per year or Ushs12 500 000 (approx. USD 5 700) per three consecutive months.Individuals and firms whose business sales turnover is belowthese thresholds are exempt from VAT. VAT is payableirrespective of whether the business is profitable or not. VATregistration for individuals and firms with business salesturnover of above these thresholds must register with the URAfor VAT. All professionals are also required to be registered forVAT regardless of their turnover of taxable goods or services.A person who has registered for VAT can charge VAT as an outputtax at a rate of 18%. When a VAT payer buys goods and services,he pays VAT as an input Tax. When the output tax (what a personregistered for VAT pays) exceeds the input tax (what he chargescustomers as VAT), a refund of the difference can be claimedfrom the URA. When the input tax is greater than the output tax,the difference is payable to the URA within 15 days after the endof the month in which the transaction took place.Stamp DutyStamp duty is an indirect tax levied on a number of legaldocuments and certain agreements.Taxation of Rental IncomeRental income of an individual is separated from other incomeand is taxed at a rate of 20% of the gross rental income in excessof Ushs 1 560 000 per year.Withholding TaxDividends and interest are subject to a withholding tax of 15% forboth residents and non-residents. However there is an