Delays in Air Cargo Documentation

What are the common causes of delays by air cargo companies in providing supporting import documentation upon arrival in Uganda, and how is URA addressing this issue?

Dear Reader,

Delays in providing supporting import documentation for air cargo are mainly due to the reconciliation process required before cargo details are captured into the customs system. At Entebbe International Airport, this process is often initiated by airline ground handlers after the aircraft has landed. Because much of the data entry is still manual and depends on the volume of cargo on each flight, it may take several hours to complete.

To address this challenge, the Uganda Revenue Authority (URA) is in the advanced stages of automating and integrating systems with airlines operating through Entebbe. The goal is to enable electronic submission of cargo manifests before the aircraft arrives, allowing taxpayers to begin the clearance process in advance and significantly reduce turnaround time.

In the interim, taxpayers are encouraged to:

• Ensure accurate and timely declarations, and
• Provide all relevant and authentic import documentation promptly

This will help facilitate faster customs clearance and minimize delays.

Tax Clearance for Financially Distressed Businesses

How can financially distressed businesses with outstanding tax obligations obtain tax clearance certificates to resume operations?

Dear Reader,

Financially distressed businesses that have outstanding tax obligations are not automatically disqualified from obtaining a Tax Clearance Certificate (TCC). They may still regularize their tax status through structured arrangements. A taxpayer in such a situation can apply for an installment payment plan to settle their outstanding liabilities over time.

On the basis of this, the taxpayer can then apply for a Tax Clearance Certificate, which may be issued subject to the terms of the agreed arrangement. This enables the business to continue or resume operations while progressively meeting its tax obligations.

It is therefore important for distressed businesses to proactively engage with URA, seek payment arrangements, and maintain adherence to agreed terms in order to qualify for tax clearance.

Impact of Loan Repayments on Tax Assessments

How does URA consider situations where business income was primarily used to service bank loans when assessing income tax liabilities?

Dear Reader,

When assessing income tax liabilities, Uganda Revenue Authority (URA) focuses on the taxable income of the business, rather than how the income is applied.

Income generated from business operations must be fully declared as part of gross income, regardless of whether it is used to repay loans or meet other financial obligations. The use of that income to service debt does not, in itself, reduce the tax liability.

However, a taxpayer is allowed a deduction for interest expenses incurred on business loans, provided that:

• The loan was obtained for business purposes, and
• The related income has been properly declared.

It is important to note that the deductibility of interest is subject to limitation rules. Specifically, for taxpayers who are part of a group, the allowable interest deduction is restricted to 30% of Tax Earnings Before Interest, Depreciation, and Amortization (EBITDA) in line with thin capitalization provisions. Any interest incurred on non-business (personal) loans is not deductible for tax purposes.

 Customs System Classification Challenges

What should importers do when specific customs codes (e.g., classification codes) fail to work in the system during declaration?

Dear Reader,

Uganda Revenue Authority (URA) uses the Harmonized System (HS) of Classification, which assigns standardized codes to goods for proper identification and application of the correct taxes.

In some cases, certain HS codes may fail to work in the system during declaration. This is often because URA places controls on specific or sensitive codes to prevent misuse or misclassification. As a result, these codes may require prior authorization before they can be used by an importer.

For example, some goods attract different tax rates depending on their classification, and misclassification can lead to incorrect tax payments. To manage this risk, URA may restrict access to such codes until the correct use is verified and linked to the importer’s TIN.

What should importers do?

• Contact the URA Customs Tariff Unit for guidance and clarification.
• Use URA’s online support platforms (Touch point, our email, services@ura.go.ug. Our toll-free lines 0800217000 or our WhatsApp number 0772140000) to request assistance.
• Ensure that all product details and supporting documents are accurate to facilitate proper classification.

URA will review the request and, where appropriate, grant authorization or provide the correct classification guidance to enable smooth declaration.

 Transfer of Tax Credits Between Accounts

What is the current process for transferring tax credit balances across different tax heads or periods, and has this changed recently?

Dear Reader,

The process of utilizing credits across different tax heads or periods has not changed. To utilize credits, a taxpayer should follow the steps below:

• Log in to your TIN account using your TIN and password.
• Navigate to the Payments menu and select Credit Transfer.
• You will be directed to a page where you can choose the type of transfer, such as:
  • Adjusting a tax period
  • Transferring between tax types
  • Transferring from one taxpayer to another
• Select the appropriate transfer details and proceed to submit the request.

Please note the following;

• Certain credits, such as Withholding Tax (WHT) and VAT/LED offsets, cannot be transferred across different tax heads through this process. These can only be utilized through a refund application.
• Transfers across tax heads are generally only permitted where a payment was incorrectly made under the wrong tax head.

Has the process changed?
Yes. The process has recently reverted to a system-based self-service approach. Previously, taxpayers were required to formally write to URA requesting approval for credit transfers. The restored process now allows eligible transfers to be initiated directly through the taxpayer’s online account.

System Changes and Taxpayer Experience

What improvements has URA implemented in its system upgrades, and how is it addressing concerns raised by taxpayers about reduced functionality?

Dear Reader,

URA continuously implements system upgrades and digital transformation initiatives aimed at improving service delivery, simplifying tax processes, and enhancing taxpayer experience. For example, Local Excise Duty, Rental Income Tax, and VAT returns were migrated from Excel-based submissions to simplified web-based platforms, while digital payment options have been expanded to include EFT, RTGS, VISA, over-the-counter banking, and mobile channels such as USSD *285#.

In line with URA’s Digital Strategy, the Authority continues to strengthen automation, system integration, accessibility, and service reliability to support faster and more convenient taxpayer services. Where concerns arise following upgrades, URA continuously engages stakeholders, monitors system performance, and implements improvements to address functionality gaps and enhance overall user experience.

Support Measures for Small and Medium Enterprises (SMEs)

What support or relief measures does URA provide to SMEs facing financial hardship, particularly those still recovering from the economic effects of COVID-19?

Dear Reader,

URA has provided various relief measures to SMEs facing financial hardship. The measures include;

• A waiver of interest and penalties outstanding as at 30th June 2024 where a person pays their principal tax by 30th June 2026. However, where a person pays only a part of the principal tax, the interest and penalty waived will be what relates to the portion of the principal tax paid.
• Voluntary Disclosure Program where penalties and interest are waived if a taxpayer voluntarily declares tax that was not previously declared.
• Installment payments where a taxpayer can pay their tax in manageable installments. To apply for a payment plan, follow the steps below:
• Log in to your TIN account on the URA portal at ura.go.ug;
• Under e-Services, select “apply to pay tax in instalments”;
• Select the basis of instalment and the tax type;
• Fill in the instalment amount, amount to be paid as a down payment, number of instalments and start date to generate the instalment payment schedule;
• Click next, upload any document if any and type the reason why you are applying for the instalments, select the declare information box and click submit.

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