I was paid damages through a court case, does URA tax the compensation/ damages I received?

Dear Reader

A compensation payment derived by a person from a court case takes the character of the item being compensated. For example, if an employee sues their employer for unlawful dismissal and court orders the employer to pay the employee for lost earnings. The lost earnings take the character of employment income and attract tax which the employer has to deduct from the payment to the employee and remit to URA as Pay As You Earn (PAYE).  However, where court awards the employee damages resulting from, for example, emotional distress or physical pain and suffering then such compensation is not taxed.

If I make a payment for taxes, but do not file any return, is there any penalty imposed on me?

Dear Reader,

Any person who fails to file a tax return by the due date is liable to pay a penal tax equal to 2% of the tax payable or UGX200,000 per month whichever is higher for the period the return is outstanding.

Therefore, you are advised to file your returns by the due date to avoid being penalized.

What is smuggling?

Dear Reader,

Smuggling is the illegal import, export, movement, or transfer of goods into or out of a country to avoid paying customs duties or taxes, or to bypass customs laws, restrictions, regulations, or conditions

Smuggling is an offence under the East African Community Customs Management Act (EACCMA) and a person who smuggles goods shall be liable on conviction to imprisonment for a term not exceeding five years or to a fine equal to fifty percent of the value of the goods involved. 

I opened up a YouTube channel; what taxes am I required to pay?

Dear Reader,

Upon commencement of the business, a person is required to register and account for applicable taxes with Uganda Revenue Authority.

In the case of your YouTube channel, the following taxes may apply: 

• Income Tax: This is tax on profit generated by a business entity which may be taxed under the Individual tax rates (where the business is owned by an individual) or at corporation tax rate (where the business is operated as a company). Income tax is accounted for on an annual basis;

• Pay As You Earn (PAYE): This is deducted at source from the salaries and allowances of employees. Where the business is operating as a company, the director(s) may account for tax on their salary through the PAYE collection mechanism. However, where the director(s) has other sources of income, they will be required to account for their income through filing Individual Income Tax returns. An employer is required to account for PAYE monthly through a PAYE return and remit the taxes due by the 15^th of the following month.

I inherited land from my grandfather, I would love to transfer the said land into my name. Is there any tax I need to pay?

Dear Reader,

Transfer of land is subject to stamp duty at a rate of 1.5 % of the value of the land as determined by the Government valuer.

Apart from the Employment income of a person employed as a Member of Parliament, except salary, which other categories of persons do not pay taxes on their income?

Dear Reader,

Section 21 of the Income Tax Act provides for income exempt from tax and these include the incomes of; The Government of Uganda, the official employment income of a person employed in the Uganda Peoples’ Defence Forces, External Security Organization, Internal Security Organization, Uganda Police Force, Uganda Prisons Service, other than a person employed in a civil capacity, the employment income of a prosecutor in the Office of the Director of Public Prosecution, Public international organisations listed under Schedule 2 of the Income Tax Act among others.

Local Council officials receive payments regularly from Government in form of allowances, does URA tax these payments?

Dear Reader,

Allowances paid to councilors are subject to income tax. Therefore, the Local Council is required to withhold and remit tax on the payment.

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