Uganda

The standard corporate income tax rate in Uganda is 30%.

Mining companies are subject to a special variable income tax regime rather than the standard corporate rate. The applicable rate is determined using a statutory formula based on the ratio of chargeable income to gross revenue. This formula results in a progressive tax rate that adjusts based on the company’s profitability but is subject to statutory limits. The effective tax rate ranges between 25% and 45%.

Uganda also operates a presumptive tax regime for small businesses with an annual turnover not exceeding UGX 150 million (USD 39,894). The regime simplifies compliance for small taxpayers through fixed or turn-over based tax rates. Depending on the level of turnover, the tax payable ranges up to UGX 900,000 (USD 239) or UGX 360,000 (USD 96) plus 0.7% of the turnover above UGX. 80,000,000 (USD 21,277).

Uganda has not yet implemented a global minimum tax regime. However, the country is actively preparing for the OECD/G20 Inclusive Framework on BEPS Pillar II with technical support from the African Tax Administration Forum.

Ongoing efforts involve assessing the potential impact of top-up taxes on multinational enterprises operating in Uganda, reviewing the effectiveness of existing tax incentives, and considering policy reforms aimed at protecting the domestic tax base while maintaining investment competitiveness.

Chargeable income is determined after deducting allowable expenses from gross income. Gross income generally includes business income, employment income and property income, excluding exempt income.

Uganda does not operate a separate capital gains tax regime. Gains arising from the disposal of business assets are generally treated as ordinary business income and taxed at the applicable corporate income tax rate. A disposal occurs where an asset is sold, exchanged, redeemed, or distributed, transferred by way of gift, destroyed or lost.

Where there is a change in ownership by 50% or more of a person other than, government, political subdivision of a government or a listed institution located in Uganda, the law treats all assets and liabilities as having been realised at market value immediately before the change.

Residents are taxed on their worldwide income, while non-residents are taxed only on income sourced in Uganda. Resident taxpayers are entitled to claim foreign tax credits for income tax paid outside Uganda on foreign-source income, subject to limitations designed to ensure that the credit does not exceed the Ugandan tax attributable to that income.

The Income Tax (Amendment) Bill, 2026 proposes introducing a 5% withholding tax on interest payments made to foreign banks and public financial institutions on offshore loans, removing an exemption previously available under section 82(5) of the Income Tax Act (ITA). The proposed change is intended to broaden Uganda’s tax base, align Uganda with regional tax practices, and reduce the preferential treatment of offshore financing.

Uganda imposes indirect taxes, including:

• Value Added Tax (VAT). The VAT regime comprises standard-rated supplies taxed at 18%, zero-rated supplies taxed at 0% for which input tax can be claimed and exempt supplies on which no VAT is charged. The registration threshold is an annual turnover of UGX 300,000,000 (USD 80,000).
• Excise duty is imposed at varying specific or ad valorem rates depending on the nature of the goods or services, including alcohol, tobacco, fuel, soft drinks, telecommunications, mobile money and betting services.
• Customs duties are imposed on imports under the East African Community Common External Tariff framework, which generally classifies imports and applies duty rates of 0%, 10%, 25%, and higher rates for sensitive goods.

Uganda operates a broad withholding tax regime applicable to both residents and non-residents. Tax is deducted at source by designated withholding agents and, depending on the nature of the income, may either constitute a final tax or be creditable against the taxpayer’s final income tax liability. The withholding tax rates as provided under the ITA include;

Certain categories of withholding tax constitute a final tax, particularly in relation to interest earned on treasury bills and other government securities paid by the Bank of Uganda, as well as interest paid by financial institutions on fixed deposits to resident individuals acting in their own capacity, resident retirement funds and exempt organisations. In addition, withholding tax on mobile money commissions, airtime distribution commissions, and dividends paid to resident individuals is treated as a final withholding tax.

Withholding agents are required to remit taxes withheld within 15 days after the end of the month in which the payment was made. Failure to withhold or remit tax exposes the withholding agent to personal liability for the unpaid amount, together with penalties and interest.

The withholding agent must also issue tax credit certificates to taxpayers and maintain adequate records for inspection by the Uganda Revenue Authority (URA).

Uganda has a General Anti-Avoidance Rule (GAAR) under the ITA contained in the ITA, Chapter 338.

Section 117 allows the Commissioner of the URA to adjust or disregard arrangements that are artificial, lack commercial substance, or are designed primarily to obtain a tax benefit. The law also permits the Commissioner to recharacterise transactions between related parties to ensure that they reflect arm’s length conditions.

In practice, the GAAR is frequently invoked in transfer pricing disputes, tax planning structures, financing arrangements, and transactions perceived to lack genuine economic substance.

The most common sources of tax controversy in Uganda include:

• Variances between VAT and income tax declarations. EXP Momentum (U) Ltd URA, the dispute concerned alleged inconsistencies between VAT and income tax returns, where the taxpayer argued that the differences arose from timing and accounting treatment rather than under-declaration.
• Customs valuation and tariff classification. Tropical Heat (U) Ltd v. URA, the dispute arose from URA’s rejection of the transaction value method for imports from a related party and the reassessment of customs value. The Depo v. URA; Rocket Products v. URA; TATA Uganda v. URA.
• Transfer pricing adjustments. Bondo Tea Estates Ltd v. URA, the dispute concerned whether URA properly applied the arm’s length principle in adjusting prices for related-party tea supply transactions. In East African Breweries Ltd v. URA, the dispute concerned whether the pricing arrangement between related entities, under which products were sold at a significantly lower markup to an associated company before resale to external customers at much higher margins, complied with the arm’s length principle.
• Application of Double Taxation Agreements. In White Sapphire & Crane Bank v. URA, the dispute concerned whether dividends paid to a Mauritian shareholder qualified for the reduced withholding tax rate under the Uganda–Mauritius Double Taxation Agreement and whether the recipient was entitled to treaty benefits based on its residence status. In Target Well Control Uganda Ltd v. URA, the dispute concerned whether intercompany lease payments made to a UK entity were subject to withholding tax notwithstanding the provisions of the Uganda–UK Double Taxation Agreement and the absence of a permanent establishment in Uganda.
• Withholding tax on cross-border payments. Kalangala Infrastructure Services Ltd v. URA, the dispute concerned whether interest paid to a Mauritius-based lender qualified for withholding tax exemption under the ITA.
• Interest deductibility. The case of Rwenzori Bottling Co. Ltd v. URA arose from the application of the amended interest deduction rules. The dispute in Aponye Uganda Limited v. URA related to the definition of beneficial ownership. In Moil Uganda Limited v. URA, the dispute concerned whether a company with common shareholders as other foreign entities constituted a “group” under section 25 of the ITA, thereby limiting its deductible interest expense to 30% of EBITDA despite the loans having been independently obtained and utilised by the taxpayer.In Techno Three Limited v. URA, the Tribunal held that the limitation did not apply to dormant associated companies and set aside the assessment while in Ambitious Construction Co. Ltd v. URA, the Commercial Court held that the 30% EBITDA limitation applies to net interest expense rather than gross interest expense.
• VAT refund — input tax credit. Chestnut v. URA concerned whether a VAT-registered property developer was entitled to claim input VAT incurred on construction and related services for a commercial mall before the project commenced generating taxable rental income, and whether such costs were incurred for use in making taxable supplies In Enviroserv (U) Ltd v. URA a VAT registered taxpayer was entitled to claim input VAT on taxable supplies acquired for use in its business activities notwithstanding that it had not yet made taxable supplies during the relevant tax period the issue for determination was whether .
• Tax treatment of commission agents. WAVE Transfer v. URA related to the tax treatment of commissions paid to distributors, whether the engagements constituted employment or independent contractor relationships and the applicable withholding tax regime. Similar disputes arose in Uganda Communications Commission v. URA and Uganda Insurer’s Association v. URA.
• VAT treatment of supplies. ELMA Philanthropies v. URA, the dispute concerned whether services provided to a foreign entity qualified as exported services for VAT purposes and whether the services were used or consumed outside Uganda so as to be treated as zero-rated sales at a rate of 0% rather than standard rate of 18%. The disputes in Canaan Sites v. URA, Nguvu Diary Ltd v. URA related to whether the supplies made were exempt supplies or standard rated and therefore subject to VAT at 18%. In Allied Beverages Co. Ltd URA, the issue for determination was whether marketing and promotional services provided in Uganda to a foreign company qualified as exported services for VAT purposes.
• Excise duty and digital services: MTN Uganda Ltd v URA and Airtel Uganda Ltd v URA concerned URA’s assessment of local excise duty on OTT services, particularly the identification of taxable OTT accesses using data and monitoring methodologies. The Tribunal considered the statutory basis for the assessments, the meaning of “access” and the reliability of URA’s monitoring methodology and, by majority, set aside the assessments.
• Transfer Pricing Mini Bakeries Uganda Ltd v URA, the Tribunal upheld URA’s transfer pricing adjustments in relation to trademark royalties and related-party financing, largely because the taxpayer had not provided sufficient documentary evidence to substantiate the basis and arm’s-length nature of the transactions. The decision highlights the importance of maintaining adequate supporting documentation for related-party transactions.

Tax controversy and dispute resolution in Uganda is governed by the Tax Appeals Tribunal Act, Chapter 341, Tax Procedures Code Act, Chapter 343 and the East African Community Customs Management Act 2004. The dispute resolution process generally starts with the issuance of an assessment by Uganda Revenue Authority.

Domestic taxes

Objection to the assessment. A taxpayer dissatisfied with an assessment or taxation decision issued by URA may within 45 days after receiving the notice of the tax decision lodge an objection. Pending resolution of the objection, the taxpayer is generally required to pay 30% of the assessed tax or the undisputed tax, whichever is higher.

Objection decision. Upon review of the objection and supporting documentation, the Commissioner is required to issue an objection decision within 90 days either affirming, vacating, reducing or increasing the assessment. Where an objection decision has not been served within the prescribed time, the person objecting may by notice in writing to the Commissioner elect to treat the objection as having been allowed.

Alternative dispute resolution (ADR). A taxpayer dissatisfied with the decision of the Commissioner General may apply to the Commissioner to resolve the dispute using the alternative dispute resolution procedure. According to the Tax Procedure Code (Alternative Dispute Resolution Procedure) Regulations, 2023 provide that such an application must be made within seven days from the date of receipt of the tax decision.

Appeal to the Tax Appeals Tribunal. A taxpayer dissatisfied with the objection decision may apply to the Tax Appeals Tribunal for review of the decision within 30 days from the service of the objection decision. The Tribunal has the power to affirm, vary, or set aside the objection decision and may substitute its own decision or remit the matter back to the Commissioner for reconsideration.

Appeal to the High Court. A party dissatisfied with the decision of the Tax Appeals Tribunal may appeal to the High Court within thirty days from receipt of the Tribunal’s decision. Appeals to the High Court are restricted to questions of law only.

Appeal to the Court of Appeal. A party dissatisfied with the decision of the High Court may within 30 days from receipt of the High Court’s decision, appeal to the Court of Appeal. An appeal to the Court of Appeal is limited to points of law.

Appeal to the Supreme Court. A decision by the Court of Appeal may, with leave of court, be appealed to the Supreme Court where the matter raises questions of law of great public importance or where the Supreme Court in the interest of justice considers that the appeal should be heard.

Customs

Application for review to the Commissioner. A person dissatisfied with a decision or omission of the Commissioner or a customs officer may lodge an application for review with the Commissioner. The application must be made in writing within the prescribed statutory period, generally 30 days from the date of the decision.

Review decision. The Commissioner is required to consider the application and within 30 days communicate the review decision, stating the reasons for the decision. Where the Commissioner fails to communicate their decision within the prescribed time, the Commissioner is deemed to have decided to allow the application.

Appeal to the Tax Appeals Tribunal. A taxpayer dissatisfied with the Commissioner’s review decision, may lodge an appeal within forty-five days from the date of the Commissioner’s decision.

Appeal to the High Court. A party dissatisfied with the decision of the Tax Appeals Tribunal may appeal to the High Court on points of law.

Appeal to the Court of Appeal. A party dissatisfied with the decision of the High Court may within 30 days from the receipt of the decision of the High Court appeal to the Court of Appeal. An appeal to the Court of Appeal is on points of law.

Appeal to the Supreme Court. A decision by the Court of Appeal may, with leave of court, be appealed to the Supreme Court where the matter raises questions of law of great public importance or if the Supreme Court in the interest of justice considers that the appeal should be heard.

Uganda recognises Alternative Dispute Resolution (ADR) as part of its tax dispute management framework.

A taxpayer may apply to resolve a dispute through ADR after challenging a tax decision issued by the Commissioner General. The available mechanisms include negotiation and conciliation, both aimed at facilitating amicable settlement without resorting to prolonged litigation.

Under the conciliation process, an independent conciliator may be appointed to facilitate discussions between the taxpayer and the URA without offering an opinion on the merits of the case.

Where the Commissioner and the taxpayer agree to resolve a disputed tax decision using the ADR procedure. A taxpayer is required to indicate their preferred method of ADR and, where applicable, indicate a proposal for the settlement of the dispute.

The Tax Appeals Tribunal also has the power to refer matters to mediation before formal hearing. ADR has increasingly become an important mechanism for resolving tax disputes efficiently, reducing litigation costs, and preserving commercial relationships between taxpayers and the revenue authority.