General Articles & Work: November 2015

Presumptive and Advance Tax Regime Under the Income Tax Act 2015

PRESS RELEASE
PRESUMPTIVE AND ADVANCE TAX REGIME UNDER THE INCOME TAX (AMENDMENT) ACT 2015.

Pursuant to the amendment of Section 4(5), Section 134 and the Second Schedule of the Income Tax Act, the following tax measures were introduced:

1. A revised presumptive tax regime that provides for new thresholds and rates based on turnover, location and business activity.
2. Advance tax for goods and Passenger Transport Service vehicles (PSVs).

Effective Date:
These tax measures become effective on the 1st of July 2015.

Objectives:
The above measures are intended to;

Simplify procedures for small tax payers to comply

Widen the tax base thus improving revenue contribution from the informal sector; and

Reduce the cost of compliance among the Small Enterprises.

Implications:
The implication of the above amendments is that all the affected taxpayers shall be paying tax at the new prescribed rates.
The taxpayers affected are;

Small enterprises whose turnover does not exceed UGX 150 million.

Operators of Passenger Transport Service Vehicles (PSVs)

Goods vehicles with a loading capacity of more than 2 tonnes.

Presumptive Tax for SMEs
Taxpayers are encouraged to study the rates below so that they are able to comply even before URA staff visit their premises.
URA staff shall conduct door to door activities country wide aimed at identifying businesses who have not complied. These businesses shall be assessed based on location, type of business activity or turnover as shown in the tables below.
Table 1: Businesses based in Kampala City and its Divisions.

Business Trade	With turnover between 35 million to 50 million	With turnover between 20 million to 35 million	With turnover between 10 million to 20 million
General Trade	500,000	400,000	250,000
Carpentry/ Metal Workshops	500,000	400,000	250,000
Garages (Motor Vehicle Repair)	550,000	450,000	300,000
Hair and Beauty Salons	550,000	400,000	300,000
Restaurants or Bars	550,000	450,000	300,000
Clinics	550,000	450,000	300,000
Drug Shops	500,000	350,000	100,000
Others	450,000	300,000	200,000

Table 2: Businesses based in the Municipalities of Uganda

Business Trade	With turnover between 35 million to 50 million	With turnover between 20 million to 35 million	With turnover between 10 million to 20 million
General Trade	400,000	300,000	150,000
Carpentry/ Metal Workshops	400,000	300,000	150,000
Garages (Motor Vehicle Repair)	450,000	350,000	200,000
Hair and Beauty Salons	450,000	350,000	200,000
Restaurants or Bars	450,000	350,000	200,000
Clinics	450,000	350,000	200,000
Drug Shops	400,000	300,000	150,000
Others	400,000	350,000	150,000

Table 3: Towns and Trading Centres

Business Trade	With turnover between 35 million to 50 million	With turnover between 20 million to 35 million	With turnover between 10 million to 20 million
General Trade	300,000	200,000	100,000
Carpentry/ Metal Workshops	300,000	200,000	100,000
Garages (Motor Vehicle Repair)	350,000	250,000	100,000
Hair and Beauty Salons	550,000	200,000	100,000
Restaurants or Bars	350,000	250,000	100,000
Clinics	350,000	250,000	100,000
Drug Shops	300,000	200,000	100,000
Others	300,000	250,000	100,000

Table 4: Turnover of over 50 million but not exceeding 150 million

Turnover	Tax Rate or Amount of Tax
Where the gross turnover of the taxpayer exceeds Shs. 50 million but does not exceed Shs. 75 million per annum	Shs. 937,500 or 1.5% of the gross turnover, whichever is lower
Where the gross turnover of the taxpayer exceeds Shs. 75 million but does not exceed Shs. 100 million per annum	Shs. 1,312,500 or 1.5% of the gross turnover, whichever is lower
Where the gross turnover of the taxpayer exceeds Shs. 100 million but does not exceed Shs. 125 million per annum	Shs. 1,687,500 or 1.5% of the gross turnover, whichever is lower
Where the gross turnover of the taxpayer exceeds Shs. 125 million but does not exceed Shs. 150 million per annum	Shs. 2,062,500 or 1.5% of the gross turnover, whichever is lower

Advance Tax on Passenger Transport Service (PSVs) and Goods Vehicles:Taxpayers are encouraged to to have paid their advance Income tax in accordance with the laws and schedules below:
Any taxpayer operating Goods Vehicles, PSVs, PMO and any other commercial vehicle who will not have complied, shall be asked to comply before assessing certain services including:
a)    Operator's Licenses at Transport Licensing Board (TLB) under the Ministry of Works and Transport (MoWT),
b)    Transfer of Ownership and
c)    At spot checks to be conducted by URA along major roads.
Spot checks shall be mounted from time to time by TLB and URA in collaboration with Uganda Police to ensure operators have complied.
Goods Vehicles: A tax of UGX 50,000 per ton for goods vehicles with a loading capacity of more than 2 tons.
PSV/ PMO: A tax of UGX 20,000 per passenger per year for PSVs/ PMOs.
Examples,

Passenger Service Vehicle

Goods Vehicles

Licensed Seating Capacity	Tax payable at rate of UGX 20,000 per person	Licensed Tonnage	Tax payable at rate of UGX 50,000 per ton
Y	Z=Y*20,000	P	Q=P*50,000
1	20,000	2	100,000
5	100,000	4	200,000
14	280,000	6	300,000
25	500,000	8	400,000
32	620,000	10	500,000
49	980,000	20	1,000,000
50	1,000,000	30	1,500,000
62	1,240,000	40	2,000,000

Benefits:1.    Taxpayers will have the opportunity to self assess and pay conveniently using a method of their choice including mobile money applications.
2.     Reduced number of visits to URA & Licensing authority
3.     Access URA and TLB services at one stop centre for assessment at Transport Licensing Board (TLB).
4.    Reduced cost of doing business
5. Taxpayers are also requested/ advised not to attempt to under assess based on lower passenger / load carrying capacity, otherwise they will be required to pay the balance upon inspection by an Inspector of Vehicles at TLB/ MoWT.
Please note that even taxpayers already filing tax returns are expected to pay advance income tax and will be given a credit at the end of their respective tax periods at the filing time.
URA therefore appeals to the public to embrace this initiative wholeheartedly to ensure that if everybody pays a little nobody has to pay too much.

For further assistance please contact us on 0800117000 (toll free) or 0417444602 (not toll free) or email us at services@ura.go.ug.

Henry Saka

COMMISSIONER DOMESTIC TAXES

- Press Release New Vision September 17, 2015