Handbags and clothes. I guess you belong to small tax pay. We have a schedule for small tax payers which is a small tax that you have to pay. See the table below to determine your class is.

This is only for small tax payers whose gross turn over/year doesn’t go above 150m.
If your total sales in a year is less than 150m then you are a small tax payer and you belong to the above income tax payer group

Kindly analyze it. Those who keep records pay less tax compared to those without records. It is important to keep records of your sales but everyone is catered for with or without records.

Question 1: What kind of records do we need to keep?

Basically sales are important and expenses/purchases

Question 2: How does URA verify my amount?

I write to them and let them know? If yes, how? or I wait for them to come to my place?*
You don’t need to wait for URA. You just pay depending on the sales made as per the schedule shown. Small tax payers usually pay less tax.

If u keep your sales records.it help to verify your amount to pay. Otherwise if u don’t have records. The system allows too but you must have a tin number.

Kindly note that small tax payers are composed of both registered companies, individual business and non-registered businesses.so long as your revenue earning is less than150m.in a year. You don’t need to use complicated tax computation while filing your returns. No need for balance sheet or profit & loss declaration to URA. Yours is simple and less expensive. Your payment acts as a return at the same time. If your revenue is less than 10m in a year. then u don’t need to pay any tax coz u are below the threshold.

Question 3: Why is it that every year I am assessed high amount yet I own a small business and my turnover is below 50M?

Usually, we get assessments because we don’t file any return to URA. There is no way URA can know how you are performing in less u file your income tax. As a result they estimate and assess you and usually unfortunately those estimates are always high turnover is below 50M?
But if you have and keep your records then we can objected the assessment and get it reversed or reduced.

Whether u re making money or not u are supposed to file the are turn Even if your company or business has no transactions yet and is still new or not in operations, you can still file annual returns but u should file a return that is what compliance requires

Question 4: can you object after they have sent u the high bill?

Yes, very much, but you need to analyze the evidence u have to challenge and reverse the amount assessed. Usually here you need the professional personal to assist you. Otherwise it’s not good to challenge and loose the case.

Question 5: Does a small business with Gross turnover of less than 10M have to get Registered?

No, they don’t qualify
They don’t qualify to register for taxes but I believe that you need to register the company at times opportunities come along and your company is not registered

This is a tax imposed on both individuals and companies depending on the revenues or profits earned. Tax rates may differ due to the income type and taxpayer characteristics.

• Individual Income Tax that is imposed on all individuals engaging in income generating activities/businesses.
• Corporation Tax that is imposed on all corporate entities engaging in income generating activities/businesses.
• Pay As You Earn (PAYE) that is charged on employees (earning monthly income above 235,000) by employers and then remitted to URA on behalf of the employees.
• Withholding Tax (WHT) that is withheld at source. This. tax is an advance tax and as such the taxpayer needs to clearly declare it in the applicable tax return such that it reduces the tax liability of the period it relates to.
• Rental Tax that is imposed on the total amount of rent derived by a person for the year of income from the lease of immovable property (land and/or buildings) in Uganda.

Individual and corporation tax and rental are filed & paid annually to URA before 31st Dec (Return filing and payment altogether) and by June a provision should have been made.

Provision first in June and then final in Dec. This is Compulsory, otherwise penalties/assessments will be unavoidable.

PAYE and WHT are filed and paid every month before every 15th of the month to URA.

Question 1: How do i calculate these taxes Pius?

Individual and company/Corporation rates are at 30% of your profits, however, individual persons/business are given other more tax brackets/formulas that makes your tax cheap and small compared to companies.

For PAYE, see below …

RESIDENTS (Individuals in Employment)

NON-RESIDENTS (Individuals in Employment)

Rental tax👇🏻

COMPUTATION OF RENTAL INCOME TAX

For Individuals business

• Step I: Determine the total annual gross rental income (R) from all sources of the individual;
• Step II: Deduct the threshold of 2,820,000 UGX

Note: No other deductions allowed

Revenue – 2,820,0000 = Chargeable income

• Step III: Determine rental income tax at 12%

Tax payable = 12% x chargeable income

You are supposed to be making invoices/billing/sales to all your customers and keeping records. these records will you in determining your taxes. If at the time of being paid for your services and WHT is deducted from u .they should give u a wht certificate as a proof that u have paid that tax.

Question 7: How do i know if i am a gazetted company

A list is always communicated and put on the URA website. An official letter from URA is always sent through, the company’s official email. But usually, all Large & medium Taxpayers are gazetted. and some consultancy businesses.

Question 8: Are rental businesses ever gazetted?

Not to my knowledge…

Question 9: So as a rental business i should be paying rental tax and PAYE. That is it.

For rental tax is compulsory but for PAYE is paid if you have staff<because Paye is deducted from employees and remitted to URA. If u don’t have employees no need to pay. Maybe u can decide to pay for u as directors only if u want.

Question 10. When does one/company get gazetted to collect WHT?

Every new Government financial year that starts from 1st July, a new list is issued on the URA website.

Question 11: Ok, that means a company has to apply for it?

No need to apply. its an order that you must comply with from Govt./URA. The moment you receive the communication then u have to comply and deduct WHT from all your suppliers of goods and services (only those not exempted from WHT).

Question 12: Which category of companies are exempt from WHT?

A list of those exempted from paying WHT is always on line /ura website. before deducting you need to verify if that co. or individual is exempted or not.

If your complaint you can apply to be on the exemption list

Any co or individual can apply online to get that WHT exemption. especially if your are compliant, u have a better chance of qualifying.

Question 13: We are coffee exporters, do we pay WHT? Our suppliers are individual farmers who even have no tin numbers

Exports are exempted from paying WHT and your suppliers should be encouraged by yu to get tin numbers.

Agricultural products are also exempted from WHT initially it was 1% but laiter amended to NIL.

I think question 3 is already answered (question 2). What I can add is that remember, 50% of allowable expenses in company rental business should be supported. In other words, all expenses declared while filing the return should have to be supported otherwise they will not be accepted.

And for individual rental businesses, no expenses are allowed just 12% is paid after deducting 2,820,000 (threshold) from revenue.

Question 1: Are seasonal/non permanent employees supposed to remit PAYE?

By law yes..

The bottom line is that all businesses are eligible for Taxation, especially income tax. However, some companies are exempted/given tax holidays for some years. The reason is to let them recover from the heavy investment capital spent and also to encourage industrialization. To get such a benefit, u must apply and follow the requirements. Pipo who have benefited from this are commonly foreign investors.

Also, some NGOs and other charity organizations don’t pay income tax because they are non-profit making organizations. They don’t earn a profit from their operations. However, the staff of these organisations are required to pay PAYE and NSSF since they are salary earners.

Question 1: Pius? So what i hear you say is that as long as you fall with in the tax bracket, you are to pay taxes… even a food vendor? aside the market dues?

Yes,, but remember most of those ones are below the income tax threshold (Presumptive tax/small tax payer). they earn less than 10m a year. that makes them pay market dues only.

Question 2: Can a local investor apply for a tax holiday or its only for foreign investors?

This applies to both local and foreign investors.

A farmer dealing with Fresh milk from his/her farm does pay only income tax. There is no withholding tax coz this is an agricultural product (Fresh milk). This farmer can’t file a provisional tax, but only the final income tax. Provisional tax means an estimate of income tax payable in the mid-year. Since agriculture is unpredictable farmers are exempted from filing a provisional income tax.

Kindly note that, when this Fresh milk is processed into ghee, ice cream, yogurt, etc., all other taxes can be applied like VAT and withholding tax. A trader dealing in milk products can pay or claim VAT if he/she is vat registered and often files provisional and final income tax.

Monthly returns are many the common ones include VAT, Withholding tax, Pay as you earn. (Paye), NSSF, Local exercise duty. Not every company or individual qualifies for the said monthly returns.

For Paye and NSSF returns should be compulsory though not implemented in most cases. For Local exercise duty you be dealing in products that attract that particular tax like selling cooking oil, wines, spirits etc.

Withholding tax like i said earlier, u need to be gazetted by URA to enable you to collect WHT on behalf of govt/URA. However every individual /organisation qualifies to deduct WHT on professional fees and legal fees whether gazetted or not.

To qualify for VAT registration- you should have a taxable turnover of UGX 37.5 million from your business operations in 3 consecutive months; or you should have an annual turnover of UGX 150 million or more. But sometimes you can apply voluntarily especially if you are sure that you will make large sales straightway like Large taxpayers/Manufacturers etc. Big corporations don’t wait, they apply immediately.

All the above monthly returns are filed on line to URA every month before 15th day. Failure to comply leads to penalties of 200,000 UGX and 2% interest cumulative monthly on amount payable.

We also have annual returns/income tax. this is done once a year but during the year/mid-year, you are required to file a provision and pay the tax. Kindly note that when u are paying WHT it’s part of this income tax/Paid in advance. At the end of the year, WHT paid during the year is deducted from the income tax payable at year-end and pays only the difference.

Question 1: How do I register for VAT?

U have to login in URA Web portal using your tin & password and apply through amendment on line that’s if you qualify.

Question 2: I registered my company many years back. However, I started full operation this year. They say we have taxes of 16 million but we were not operational. Also, we would like to register for VAT, please advise

Those taxes could have come as a result of not filing. It is compulsory to file whether in operation or not you must have been assessed due to non filing. You need assistance through Objections.to reverse those assessments.

Question 3: I remember some few months back a communication was passed regarding waiver of arrears of penalties? Kindly throw more light on it

The bottom line is to pay your principal liability before end of this year to benefit from this tax waiver. However, it is not a matter of just paying. If you feel u have assessments that u are not comfortable with like Nicole said, please let’s first analyze your ledger/account statement and review it and determine the authenticity of the assessment figures. Otherwise URA also make mistakes and u have aright to challenge it.my experience tells me that u have high chances to reverse those assessments if u keep and have good records let us exhaust all the chances befor paying.

The main Tax goals system is to generate revenues to pay for the expenditures of government at all levels.

But as a taxpayer let’s look at it as tax planning. which means financial planning to maximize tax efficiency. The aim is to reduce your tax liabilities and optimize the utilization of tax exemptions. So business decisions must be made to reduce the tax burden (incidence of tax).

Tax planning and goals cover several considerations and the main ones include timing of income, size, and timing of purchases, and planning for other expenditures

As a business owner, u must know the type of taxes that your organization pays, the time of payment, and make an average estimate of tax payable for your tax planning purpose. You should be able to know when money usually comes in v/s time of tax payment. Control/minimize your expenditures when time for tax payment is close by or reserve cash aside for tax purposes to avoid non-compliance with tax laws.

Also, make use of available tax exemptions. Apply for WHT exemptions. most businesses qualify for this exemption but don’t exercise this opportunity. With such exemptions, your cash flow remains somehow stable for your business operations.

Question 1: Is there a desk in URA that i can contact to know the taxes my business should and should not pay? Does URA offer this service? if yes, which?

That’s okay. But u can get it yourself … just long in using your tin number and password, all taxes registered with your tin are indicated there its simple.

I think the best way to know how to file your Taxes is to approach a professional person to guide you properly. We have different businesses with different tax registration types and different tax returns.

Its important to be guided, because there should be no trial and error while filing tax returns, otherwise the outcome might not be good. Its always better to do the right thing.

In principle, taxes should be fair, convenient, certain, and efficient to both the taxpayer and tax collectors/URA/Government. Sometimes the principle of fairness is undermined which is not correct.

I am not sure what type of taxes you are paying/filing but the bottom line is that they should be fair to you. though no one enjoys paying taxes. Kindly get an expert to review your taxes and advise whether you are doing it right or wrong.

As I said at the beginning, taxpayers have a right to understand the taxes they pay. It’s not a matter of just paying. You need to be fully comfortable with the figures/taxes that you are paying.

Question 1: What i hear u saying is that as a business person, we must embrace the set taxes…. no dodging!! and when it seems complex, obtain advise from a tax consultant who will advise on the changes you can make in production, price, etc so as to be able to pay the set taxes?

When you pay your taxes with good advice from a person who knows, then u can’t go wrong, Remember you can avoid the taxes which is okay but tax evasion is illegal.