Presumptive and Advance Tax Regime Under the Income Tax Act 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