The In­come Tax (Amend­ment) Act, 2018:  The key In­come Tax re­forms pro­posed in­clude: Ex­emp­tion from tax on in­come de­rived by op­er­a­tors and in­vestors of an in­dus­trial park or free zone. It specif­i­cally ex­empts:

nbsp;(i) The in­come of a new de­vel­oper of an in­dus­trial park or free zone whose in­vest­ment cap­i­tal is at least US$200m for a pe­riod of 10 years from the date of com­mence­ment of con­struc­tion.

(ii) The in­come of an op­er­a­tor in an in­dus­trial park or free zone or other busi­ness out­side the in­dus­trial park or free zone whose in­vest­ment cap­i­tal is at least US$30m in the case of a non­res­i­dent or US$10m in the case of a Ugan­dan cit­i­zen, for five years from the date of com­mence­ment of busi­ness.

Re­peal of ex­emp­tion with re­spect to in­come of Sav­ings and Co­op­er­a­tive So­ci­eties Cur­rently, un­der para­graph (ad) of Sec­tion 21 of the In­come Tax Act (ITA) Cap 340, the in­come of a sav­ings and co­op­er­a­tive so­ci­ety is ex­empt through 30 June 2027.

The Act pro­poses to re­peal the thin cap­i­tal­iza­tion pro­vi­sions un­der Sec­tion 89 of the ITA while pre­scrib­ing new in­ter­est de­ductibil­ity lim­i­ta­tions un­der Sec­tion 25 as fol­lows:

(i)              For all debts owed by a tax­payer who is a mem­ber of a group, the amount of de­ductible in­ter­est in re­spect of all debts shall not ex­ceed 30% of the tax earn­ings be­fore in­ter­est, tax, de­pre­ci­a­tion and amor­ti­za­tion (EBITDA).

(ii)            (ii) Any tax­payer whose in­ter­est ex­ceeds 30% of the tax EBITDA may carry for­ward the ex­cess in­ter­est for not more than three years, and the ex­cess in­ter­est shall be treated as in­curred dur­ing the next year of in­come.

This pro­posal ef­fec­tively caps de­ductible in­ter­est ex­pense dur­ing the year of in­come and any ex­cess in­ter­est ex­pense is de­ferred for fu­ture de­duc­tion within the fol­low­ing three years of in­come af­ter which the in­ter­est ex­pense loses would its de­ductibil­ity for in­come tax pur­poses.

Tax ac­count­ing for Is­lamic fi­nan­cial trans­ac­tions It has been pro­posed that the Min­is­ter shall make reg­u­la­tions for tax ac­count­ing of Is­lamic fi­nan­cial trans­ac­tions.

The Act in­tro­duces an ad­di­tional pro­vi­sion re­gard­ing the mean­ing of an in­ter­na­tional agree­ment as per Sec­tion 88 of the ITA Cap 340. The Act pro­poses to ex­pand the de­f­i­n­i­tion of an in­ter­na­tional agree­ment to in­clude the In­ter-Gov­ern­men­tal Agree­ment on the East African Crude Oil Pipe Line.

The Ac re­peals the de­f­i­n­i­tion of “pe­tro­leum ex­plo­ration right” that is cur­rently de­fined as “a re­con­nais­sance per­mit or pe­tro­leum ex­plo­ration li­cense.”

The amend­ment of the de­f­i­n­i­tion of “min­ing ex­plo­ration right” in Sec­tion 89A is pro­posed to mean “a prospect­ing, ex­plo­ration or re­ten­tion li­cense granted un­der the Min­ing Act” from “a prospect­ing, ex­plo­ration, or re­ten­tion li­cense.”

In­tro­duc­tion of WHT on pay­ments for win­nings of bet­ting/​gam­ing, for agri­cul­tural sup­plies, com­mis­sion paid by tele­com ser­vice providers on air­time dis­tri­b­u­tion and mo­bile money With­hold­ing of tax on pay­ments for win­nings of bet­ting/ gam­ing. It has been pro­posed to re­place Sec­tion 118C which pro­vided for 15% WHT on pay­ments for win­nings of sports bet­ting or pool bet­ting with the fol­low­ing:

Value Added Tax (Amend­ment) Act, 2018: The key Value Added Tax (VAT) re­forms pro­posed in­clude:

Spec­i­fy­ing of op­er­a­tions un­der which VAT is not deemed to have been paid in re­spect of some sup­plies made to a gov­ern­ment min­istry, de­part­ment or agency De­spite the fact that VAT on sup­plies to a gov­ern­ment min­istry, de­part­ment or agency is deemed to have been paid, specif­i­cally, tax­able sup­plies such as pas­sen­ger au­to­mo­bile, the re­pair and main­te­nance of that au­to­mo­bile; or en­ter­tain­ment shall not be deemed as paid by the min­istry, de­part­ment or agency

Amend­ing the de­f­i­n­i­tion of “elec­tronic ser­vices” Elec­tronic ser­vices shall be de­fined to in­clude web­sites, web-host­ing or re­mote main­te­nance of pro­grams and equip­ment, soft­ware, im­ages, texts and in­for­ma­tion, ac­cess to data­bases, self-ed­u­ca­tion pack­ages, mu­sic, films, games of chances, po­lit­i­cal, cul­tural, artis­tic, sport­ing, sci­en­tific and other broad­casts.

Fil­ing of a re­turn A tax­able per­son shall file a tax re­turn with the Com­mis­sioner Gen­eral for each tax pe­riod within 15 days af­ter the end of the tax pe­riod. In ad­di­tion to this fil­ing re­quire­ment, the Com­mis­sioner-Gen­eral may re­quire any per­son, whether that per­son is a tax­able per­son or not, to file fur­ther or ad­di­tional re­turns in the pre­scribed form, on that per­son’s own be­half or as agent or trustee of an­other per­son.

Pay­ment of tax Where an ob­jec­tion against an as­sess­ment has been filed, tax payable un­der the as­sess­ment re­mains due and payable and may be re­cov­ered, notwith­stand­ing that ob­jec­tion or ap­peal. How­ever, the date of pay­ment of the tax may be ex­tended with the dis­cre­tion of the Com­mis­sioner Gen­eral.

Amend­ing de­f­i­n­i­tion of “ed­u­ca­tional ma­te­ri­als” Ed­u­ca­tion ma­te­ri­als shall be de­fined to mean lo­cally pro­duced ma­te­ri­als which are suit­able for use in pub­lic li­braries or for ed­u­ca­tional ser­vices pre­scribed by the Min­is­ter by reg­u­la­tions.

In­tro­duc­tion of with­hold­ing VAT, the Min­is­ter shall, by no­tice in the Gazette, des­ig­nate per­sons who shall with­hold VAT of 50% be­fore mak­ing a pay­ment for a tax­able sup­ply and the per­sons des­ig­nated shall re­mit the VAT in­voiced to the Uganda Rev­enue Au­thor­ity (URA). African Trade In­sur­ance Agency shall be in­cluded on the list of Pub­lic In­ter­na­tional Or­ga­ni­za­tions. The fol­low­ing sup­plies are pro­posed to be ex­empt from VAT:  Bibles and Qur’ans,

 

Ex­cise Duty (Amend­ment) Act, 2018: Key Ex­cise Duty re­forms pro­posed in­clude:

Defin­ing “over the top ser­vices” The bill seeks to in­sert the de­f­i­n­i­tion of “over the top ser­vices” as fol­lows: “‘over the top ser­vices’ means the trans­mis­sion or re­ceipt of voice or mes­sages over the in­ter­net pro­to­col net­work and in­cludes ac­cess to vir­tual pri­vate net­works but does not in­clude ed­u­ca­tional or re­search sites pre­scribed by the Min­is­ter by no­tice in the Gazette.” Tax point on ex­cis­able ser­vices and im­po­si­tion of ex­cise duty on “over the top ser­vices”

A per­son pro­vid­ing an ex­cis­able ser­vice be­comes li­able to pay ex­cise duty on that ser­vice on the ear­lier of the date on which the per­for­mance of the ser­vice is com­pleted; the date on which pay­ment for the ser­vice is made; or the date on which an in­voice is is­sued.

A telecom­mu­ni­ca­tions ser­vice op­er­a­tor pro­vid­ing data used for ac­cess­ing over the top ser­vices is li­able to ac­count for and pay ex­cise duty on the ac­cess to the over the top ser­vices. Re­mis­sion of ex­cise duty on man­u­fac­tured goods that have been ex­ported. The Com­mis­sioner may, if sat­is­fied that ex­cis­able goods have been ex­ported, re­mit the ex­cise duty charge­able on those goods.

The Tax Pro­ce­dures Code (Amend­ment) Act, 2018: Key re­forms, the key Tax Pro­ce­dures Code re­forms pro­posed in­clude:

Pro­vi­sions in re­spect of due dates to fur­nish re­turns un­der the Lot­ter­ies and Gam­ing Act, 2016 A li­censed per­son shall be re­quired to fur­nish a weekly in ad­di­tion to a monthly re­turn with the Com­mis­sioner. This amend­ment shall re­quire a li­censed per­son to fur­nish re­turns with the Com­mis­sioner as fol­lows: −A weekly re­turn, by Wednes­day of the fol­low­ing week −A monthly re­turn, by the 15th day of the fol­low­ing month This was a pro­posal within the 2017 Tax Pro­ce­dures Code (Amend­ment) Bill, how­ever, it met re­sis­tance and was never passed into law. The 2018 amend­ment bill rein­tro­duced it.

The Min­is­ter to pay taxes on be­half of a per­son; to waive all taxes due and un­paid by Gov­ern­ment as at 30 June 201. All taxes due and un­paid by the Gov­ern­ment ex­cept tax with­held by Gov­ern­ment un­der sub­sec­tion (1) as at 30 June 2018 shall be waived.

The amend­ments in­tro­duce new sec­tions deal­ing with elec­tronic re­ceipt­ing and in­voic­ing. An elec­tronic re­ceipt­ing and in­voic­ing linked to the tax au­thor­i­ty’s sys­tem is a new con­cept in Uganda.

 

The Tax Ap­peals Tri­bunal (Amend­ment) Act, 2018: Key re­forms the key Tax Ap­peals Tri­bunal (TAT) re­forms pro­posed:

Prior to hear­ing any filed ap­pli­ca­tion, the TAT may re­fer the mat­ter for me­di­a­tion to a Reg­is­trar or to a me­di­a­tor in ac­cor­dance with Ju­di­ca­ture (Me­di­a­tion) Rules, 2013.

The TAT may make an or­der as to dam­ages, in­ter­est or any other rem­edy against any party, and the or­der shall be en­force­able in the same man­ner as an or­der of the High Court of Uganda.

It seeks to give Power to the reg­is­trar to han­dle in­ter­locu­tory ap­pli­ca­tions, tax­a­tion of Bills of Costs and me­di­a­tion A reg­is­trar shall have the power to Hear and de­ter­mine in­ter­locu­tory ap­pli­ca­tions aris­ing from an ap­pli­ca­tion filed with the TAT.

The Stamp Duty (Amend­ment) Act, 2018:  The key Stamp Duty re­forms pro­posed in­clude:

Im­po­si­tion of stamp duty on in­stru­ments used in Is­lamic fi­nan­cial trans­ac­tions Any in­stru­ments used to ex­e­cute Is­lamic fi­nan­cial trans­ac­tions shall be charge­able with a stamp duty pre­scribed by the Min­is­ter by statu­tory in­stru­ment, with the ap­proval of Par­lia­ment.

The bill seeks to de­fine, “Is­lamic fi­nan­cial trans­ac­tions” to mean “Shariah com­pli­ant fi­nan­cial ser­vices in­clud­ing Muraba­hah, Mu­darabah, Musharakah, Ijara, Wakalah, Jualah, Sukuk and Taka­ful.”

Amend­ments to Sched­ule 2 of the Stamp Duty Act, 2014 Sched­ule 2 to the Prin­ci­pal Act, is amended as fol­lows:  by sub­sti­tut­ing for the stamp duty of UGX10,000 (ap­prox. US$3) wher­ever it ap­pears, UGX15,000 (ap­prox. US$4).  By in­sert­ing im­me­di­ately af­ter item 60 se­lected in­stru­ments that have been ex­empted from stamp duty. These in­stru­ments re­late to in­vest­ments in free zones, in­dus­trial parks whose in­vest­ment cap­i­tal is US$10 mil­lion, US$30 mil­lion or US$200 mil­lion de­pend­ing on if the in­vestors are Ugan­dan cit­i­zens or op­er­a­tors or de­vel­op­ers re­spec­tively.

 

The Traf­fic and Road Safety Act, 2018: The key Traf­fic and Road Safety re­forms pro­posed in­clude:

Im­po­si­tion of the ban on the im­por­ta­tion of mo­tor ve­hi­cles which are eight years old or more A per­son shall not im­port a mo­tor ve­hi­cle which is eight years old or more from the date of man­u­fac­ture. Cur­rently, there is no limit on the age of a mo­tor ve­hi­cle im­ported into Uganda.

Im­po­si­tion of en­vi­ron­men­tal levy on mo­tor ve­hi­cles A per­son who im­ports a mo­tor ve­hi­cle which is five years old or more from the date of man­u­fac­ture shall pay an en­vi­ron­men­tal levy on that ve­hi­cle