TAX CHANGES AS PER 2015/16 NATIONAL BUDGET .
In summary....
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.
VAT changes in Petroleum & Mining Sector
Licensees are 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
Definition of exempt imports
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.
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 is now ZERO rated (Retrospectively)
Presumptive tax – threshold increased from Ushs 50m to Ushs 150m
Tax payable under presumptive:
Turn Over Rate of tax Turn over Rate of tax
>5m but < 10m NIL > 50m but < 75m 937,500 or 1.5% of turnover whichever is lower
>10m but<20m 450,000or 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 30m1,687,500 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
Where turnover is less than 50m!
(i)Kampala City and Divisions (amounts in Ushs)
Business Grade I Grade II Grade III Others
Workshops 500,000 350,000 200,000 100,000
Garages 500,000 350,000 200,000 100,000
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
(ii)Municipalities Towns(amountsinUshs)
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
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,
Thin Capitalization – 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.
Note; 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 tones,
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
Tax Identification Number (TIN) Becomes Mandatory
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
With Holding Tax on payments of re insurance premiums has been reduced from 15% (introduced in 2014) to 5%
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.
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 69,000per 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 Ushs4,000 per litre or 140% whichever is higher Ushs1,000 perlitre or 100% whichever is
Other wines 70% 80%
Gas oil(automative,light, amber for speed engine) Ushs630 per litre Ushs680 per litre
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%
ENVIRONMENTAL LEVY
Item Old rate New rate
Motorvehicles (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 5
Motor vehicles (excludinggoods vehicles) which are 10 years or more 20% of CIF value 50 % of CIF value
OPERATOR LICENCE FEES (ANNUAL)
Operator licence fees for vehicles (Class O, Class C, Class R, Class T or Class A) Ushs. 200,000 –Ushs. 1,500,000 (Dependingon no. of passengers)
Operator licence fees for vehicles (Class G) Ushs. 300,000 –Ushs. 700,000 (Dependingon no. of tons)
Operator licence fees for motor cycle (Bodaboda) 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 (Dependingon length and no. of tons)
Operator licence fees for passengervessels –propelled by oars or sailing Ushs. 60,000 –Ushs. 250,000 (Dependingonno. of passengers)
Operator licence fees for research and leisure vessels Ushs. 3000 –Ushs. 500,000 (Dependingon no. of tons)
IEAC COMMON EXTERNAL TARIFF
As agreed by Ministers of Finance during pre-budget consultative meetings
Significant decisions for Uganda include
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%
Busesfor transportation of more than 25 persons 25% 10%
Item Old duty rate Ne rate
The above benefits will be valid for a period of one year. Business community is encouraged to take advantage of these benefits
UGANDA REVENUE AUTHORITY TO IMPROVE ON STRATEGY
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.
INTERNATIONAL AGREEMENTS
Uganda 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.
SUMMATION
Tax amendments are all geared towards;
Increasing tax to GDP ratio,
Capturing the informal sector which forms 49%of GDP,
Improve collaboration among Government ministries and Agencies, and
Enhance tax compliance and revenue collection,
The Minister promised to holistically address current tax incentives regime for investment,
The Minister pledged to be meeting with investors regularly to discuss options to improve the tax incentive regime and appropriate changes to be implemented.
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