Uganda Budget 2015/16...

1. www.pkf.com Global Expertise, Local Knowledge

2. www.pkf.com Global Expertise, Local Knowledge
GOU Budget 2015/2016
Albert Beine
Senior Tax Manager
PKF Uganda
12 June 2015
Implications of Tax amendments

3. “Maintaining Infrastructure Investment
and Promoting Excellence in Public
Service Delivery”
2015/16 Budget Theme

4. - The Public Finance Management Act 2015 among
other things requires that the budget is approved by
parliament prior to beginning of financial year,
- These tax amendments have therefore already been
approved by Parliament.
Preamble

5. VAT changes

6. Value Added Tax
• Annual VAT registration threshold has been
increased from Ushs 50m to Ushs 150m
• Cash basis accounting for VAT purposes –
Threshold increased from Ushs 200m to Ushs
500m.

7. Value Added Tax…
• VAT changes in Petroleum & Mining
sector
- Licensees to register for VAT during
exploration & development stage. This will
enable them to obtain relief
- Computation of VAT payable for “contractor”
and “licensee” – tax payable on a taxable
supply made by contractor to licensee for
mining or petroleum operations is deemed to
have been paid by the licensee to the
contractor….

8. Value Added Tax…
• Definition of exempt imports – Sect 20
- imports falling under Fifth Schedule of
EACCMA are also considered exempt
for VAT purposes. However, effective 1
July 2015, this will EXCLUDE
fluorescent bulbs with a power
connecting cap at the end.

9. Value Added Tax…
• Sect 28 – Credit for input tax – VAT on
imported services made by a “licensee” is
claimable
• Supply of cereals, where cereals are
grown and milled in Uganda now ZERO
rated (Retrospectively from Jan 2015)

11. Income Tax…
• Presumptive tax – threshold increased from Ushs
50m to Ushs 150m
• Tax payable under presumptive:
Old Rates New Rates
Turnover Rate of tax Turnover Rate of tax
>5m but < 10m NIL > 50m but < 75m 937,500 or 1.5% of turnover
whichever is lower
>10m but < 20m 450,000 or 3% of turnover
whichever is lower
>75m but <100m 1,312,500 or 1.5% of turnover
whichever is lower
>20m but < 30m 750,000 or 3% of turnover
whichever is lower
>100 but < 125m 1,687,500 or 1.5% of turnover
whichever is lower
>30m but < 40m 1,050,000 or 3% of turnover
whichever is lower
>125 but < 150m 2,062,500 or 1.5% of turnover
whichever is lower
>40m but < 50m 1,350,000 or 3% of turnover
whichever is lower
- -

12. Income Tax…
• Where turnover is less than 50m!
(i) Kampala City and Divisions (amounts in Ushs)
Business Grade I Grade II Grade III Others
General trade 500,000 350,000 200,000 100,000
Workshops 500,000 350,000 200,000 100,000
Garages 500,000 350,000 200,000 100,000
Hair & beauty
salons
500,000 350,000 200,000 100,000
Tailors 500,000 350,000 200,000 100,000
Maternity
homes
500,000 350,000 200,000 100,000
Drug shops 500,000 350,000 200,000 100,000

13. • Where turnover is less than 50m!
(ii) Municipalities & Towns (amounts in Ushs)
Business Grade I Grade II Grade III Others
General trade 500,000 350,000 200,000 100,000
Workshops 500,000 350,000 200,000 100,000
Garages 500,000 350,000 200,000 100,000
Hair & beauty
salons
500,000 350,000 200,000 100,000
Tailors 500,000 350,000 200,000 100,000
Maternity
homes
500,000 350,000 200,000 100,000
Drug shops 500,000 350,000 200,000 100,000
Income Tax…

14. Income Tax…
• No expenditure above one million will be allowed on
goods and services from a supplier who does not have
a TIN – serious taxpayers will ONLY want to deal with tax
registered suppliers,
• Definition of “branch” expanded to include;
- a place where a person furnishes services, including
consultancy services through employees or other
personnel engaged by a person for such purpose if the
activities continue for a period or periods aggregating
more than 90 day in any 12 month period,

15. • Thin Capitalisation – debt to equity ratio changed from 1:1
to 1.5:1. However, thin cap rules will not apply if the amount of
debt is at arms length
• Sect 119 - WHT on goods and services: WHT will be
applicable on;
- supply or importation of petroleum or petroleum products,
- supply or importation of plant and machinery,
- supply or importation of human or animal drugs,
- supply or importation of scholastic materials,
- supply or importation of raw materials.
Income Tax…

16. • The following taxpayers will be required to
pay advance tax before renewal of their
operational licences;
(i) Taxpayers providing passenger transport
services,
(ii) Taxpayers providing goods transport
services with vehicles of more than load
capacity of 2 tonnes,
- see rates of advance tax applicable on the above on next slide -
Income Tax…

17. Vehicle Type Advance tax ‘ UShs
Vans, pickups and lorries 500,000 per ton
Saloons, station wagons, mini
busses, buses and coaches
2,000 per passenger
per month
Drivers 100,000 per annum
Conductors 50,000 per annum
Income Tax…

18. • Tax Identification Number now a MUST!
Every local authority, Government institution,
or regulatory body shall require a taxpayer
TIN from any person applying for a license
or any form of authorization necessary for
purposes of conducting any business in
Uganda
Income Tax…

19. WHT on payments of re insurance
premiums has been reduced from 15%
(introduced in 2014) to 5%
Income Tax…

20. The provision for mineral exploration
expenditures which had earlier been
categorized under the general allowable
deductions has been repealed.
However, a comprehensive regime for
petroleum and mining sectors has been
provided for in ITA.
Income Tax…

21. Excise duty

22. Excise duty
Item Old rate ‘ UShs New rate ‘Ushs
Soft cap 35,000 per 1,000 sticks 45,000 per 1,000 sticks
Hinge Lid 69,000 per 1,000 sticks 75,000 per 1,000 sticks
Beer whose local raw
material
content(excluding water)
is at least 75%
20% 30%
Undenatured spirits Ushs 4,000 per litre or
140% whichever is
higher
Ushs 1,000 per litre or
100% whichever is
higher
Other wines 70% 80%
Gas oil(automative, light,
amber for speed engine)
Ushs 630 per litre Ushs 680 per litre

23. Excise duty….
Item Old rate New rate
Incoming
international calls
included calls from
Ke, Rw & South
Sudan – USD$ 0.09
per minute
now Ke, Rw & South
Sudan excluded
Motor vehicle
lubricants
NIL 5%
Chewing gum,
sweets & chocolates
NIL 10%
Furniture NIL 10%

24. Environmental levy
Item Old rate New rate
Motor vehicles
(excluding goods
vehicles) which are
between 5-10 years old
20% of CIF value 35% of CIF value
(also threshold period
reduced from 8years to
5years)
Motor vehicles
(excluding goods
vehicles) which are 10
years or more
20% of CIF value 50 % of CIF value
Food for thought: Will the above reduce importation of OLD vehicles?!

25. Operator Licence fees(annual)
Item New rate (Annual)
Operator licence fees for
vehicles (Class O, Class C, Class R,
Class T or Class A)
Ushs. 200,000 – Ushs. 1,500,000
(Depending on no. of passengers)
Operator licence fees for
vehicles (Class G)
Ushs. 300,000 – Ushs. 700,000
(Depending on no. of tons)
Operator licence fees for motor
cycle (Boda boda)
Ushs. 30,000
Operator licence fees for cargo
vessels in land water propelled
by oars
Ushs. 60,000
Operator licence fees for cargo
vessels in land water vessels –
sailing
Ushs. 5,000 – Ushs. 700,000
(Depending on length and no. of tons)

26. Operator Licence fees(annual)
Item New rate (Annual)
Operator licence fees for
passenger vessels – propelled
by oars or sailing
Ushs. 60,000 – Ushs. 250,000
(Depending on no. of passengers)
Operator licence fees for
research and leisure vessels
Ushs. 3000 – Ushs. 500,000
(Depending on no. of tons)

27. EAC common external tariff
Item Old duty rate New duty rate
Road tractors for semi-trailors 10% 0%
Motor vehicles for transport of goods -
5 tonnes but not exceeding 20 tones
25% 10%
Motor vehicle for transport of goods –
exceeding 20 tonnes
25% 0%
Buses for transportation of more than 25
persons
25% 10%
The above benefits will be valid for a period of one year. Private sector is
encouraged to take advantage of these benefits
As agreed by Ministers of Finance during pre-budget consultative meetings
Significant decisions for Uganda include:

28. As part of strategy to enhance tax compliance, URA will
undertake the following;
- Implement Joint Compliance Campaign for fast growing
sectors, e.g real estate, manufacturing, wholesale, etc
- Tax payer sensitization and education on tax policy
changes,
- Strengthen international taxation function & exchange of
information between Revenue Authorities,
- Expand Tax Payer Registration & Expansion program
outside greater Kla, Mbra, Wakiso, etc
Tax Administration

29. Government has ratified the following agreements;
- East African Community Double Tax Agreement,
- Agreement for Establishing of the African Tax
Administration Forum (ATAF),
- The African Tax Administration Forum Agreement on
Mutual Assistance in tax Matters,
- The OECD convention on Mutual Administrative
Assistance.
International agreements

30. - The Minister has promised to holistically address current
tax incentives regime for investment,
- The Minister has promised to be meeting with investors
regularly to discuss options to improve the tax incentive
regime and appropriate changes to be implemented.
Tax Incentive Regime for investment

31. Tax amendments all geared towards the
following;
1. Increasing tax to GDP ratio,
2. Capturing the informal sector which forms 49%
of GDP,
3. Improve collaboration among Government
ministries and Agencies, and
4. Enhance tax compliance and revenue
collection,
Conclusion

32. Presenters contact details
Albert Beine
Senior Tax Manager
PKF Uganda
Plot 1B, Kira Road
P.O Box 24544, Kampala
Tel: +256 31 2305800
email: abeine@ug.pkfea.com