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Agro processing

Agro processing is a sub sector of manufacturing that uses agriculture products as raw materials and processes them into finished products.  The agro-processing industry therefore entails adding value to raw agricultural products and transforming them into other usable products.

Examples include processed meat and fish, peanut paste (“odii”) dairy production, grain milling, bakery production, sugar processing, animal feeds, fruit processing, etc.

 

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An agro processing business is required to be registered with;

  • Uganda Registration Services Bureau (URSB) for Company registration
  • Uganda Revenue Authority (URA) for taxes
  • Local council authority e.g. KCCA, municipal council, for a trading license

Please note: Upon registration, the business may be required to comply with the requirements of statutory bodies like;

  • Ministry of Agriculture, Animal Husbandry and Fisheries
  • Uganda National Bureau of Standards (UNBS)

 

For individual

  • National ID or any other two of the following valid identification documents;  Passport, Driving permit, Voter’s card, Village ID, Employment ID, Refugee ID, recent Bank statement, Work permit, financial card, Visa, NSSF card etc.
  • Certificate of registration (incase you are in business)
  • Statement of particulars and partnership deeds (incase of a partnership)

For non-individual

  • Company Form 20
  • Certificate of incorporation

Click here for details on requirements for registration

As a taxpayer you are entitled to your rights. Equally there are obligations you must fulfill.

Click here for your rights as a taxpayer.

Click here for your obligations as a taxpayer.

 The taxes applicable to agro processing industry include the following;

Small Business/ Presumptive tax.

This is a tax charged on businesses whose annual sales exceed UGX 10, 000,000 but below UGX 150,000,000.

Corporation tax.

It’s a tax imposed on non-individual players in the sector at a standard rate of 30%.

Value Added Tax (VAT).

VAT is a consumption tax charged at a rate of 18% on all supplies made by taxable persons i.e. persons registered or required to register for VAT purposes. The threshold for VAT registration is an annual turnover of over 150 million, or 37.5 million in the first 3 consecutive months.

Click here to register for VAT

Please note: All VAT registered taxpayers are obliged to register for EFRIS and issue e-invoices.

Click here for information on how to register for EFRIS

LOCAL EXCISE DUTY

This is a tax that is imposed on specified imported or locally produced goods, and services such as beer, non-alcoholic beverages, cooking oil, etc.

Click here for applicable excise duty rates

Please Note: Some companies in the Agro processing industry are required to have digital tax stamps.

A digital tax stamp is a marking that applied to goods or their packaging and contains; security features and codes to prevent counterfeiting of goods and enable track and stress capabilities. Goods that should have digital tax stamps include; all excisable goods like wines, spirits, water, cigarettes, beers, soda, sugar, cooking oil, fruits and vegetable juices, any other alcoholic, non-alcoholic and fermented beverages. These goods are not allowed on the market without tax stamps.

Click here for more information on Digital Tracking Solution (DTS)

Withholding tax

Withholding tax (WHT) is an income tax that is withheld at source by one person (withholding agent) upon making payment to another person (payee). If an agro processor supplies goods above 1 million, the person to whom those goods are supplied charges withholding tax at a rate of 6%. The plant receives a Tax Credit Certificate that helps in offsetting tax liability in the final income tax return.

Click here for more information on Withholding tax.

Please note: The tax withheld is credited/ reduced on the tax payable in the final income tax return.

Pay As You Earn (PAYE)

This tax applies to a sector player who has employees (administrative or causal laborers) that earn an aggregate in excess of Ugx. 235,000 per month. This form of tax is withheld every month.

Click here for the PAYE rates

These returns are filed like any other Income tax returns

Click here for information on how to file your returns.

After filing a return, you’re required to pay taxes due using available payment platforms e.g. banks, mobile money, VISA, Mastercard, EFT, RTGS, USSD Code (*285#) etc.

Please note: the due date for payment of tax is the same as that of return filing.

Click here to register a payment

 

Tax incentives under Domestic Taxes

Excise duty
Type of Incentive Conditions for granting exemption

Nil duty on construction materials of a factory or warehouse exclusive of those  available on the local market, locally produced raw materials and inputs.

Operator within the industrial park, free zone or other business outside the industrial park or free zone who invests in processing agricultural goods; manufactures or assembles medical appliances, medical sundries or pharmaceuticals, building materials, automobiles, household appliances or manufactures furniture, pulp, paper, printing and publishing of instructional materials.
  • Must invest a minimum of USD 10m for foreign investors and USD 300,000 for EAC citizens or USD 150,000 where the investment is made upcountry.
  • Incentive takes effect from the date of commencement of the specified business, same incentives apply to an existing operator in an Industrial Park or Free Zone. The investor must use at least 70% of locally sourced raw materials and employ at least 70% EAC citizens who must take up at least 70% of the wage bill.
STAMP DUTY

No stamp duty on execution of the following documents;

  1. debenture; whether a mortgage debenture or not, being of a marketable security of total value;
  2. further charge; any instrument imposing a further charge on a mortgaged property of total value; lease of land of total value;
  3. increase of share capital;
  4. transfer of land;
  5. an agreement to provide services on conducting a feasibility study or developing a design for construction.
  1. In case of a new manufacturer, who is subject to availability, has capacity to use at least 70% of the locally produced raw materials, and employs at least 70% citizens with an aggregate wage bill of the new manufacturer and whose investment capital is at least 50 million US Dollars
  2. In case of an existing manufacturer who subject to availability has capacity to use at least 70% of the locally produced raw materials, and employs at least 70% citizens with an aggregate wage bill of the existing manufacturer from the date on which the manufacturer makes an additional investment equivalent of 35 million US Dollars
Nil VAT on the supply of feasibility study and design services and on the supply of locally produced raw materials and inputs.
  • Investment in processing agricultural products; manufacturing or assembling medical appliances, medical sundries or pharmaceuticals, building materials, automobiles and house hold appliances; manufacturing furniture, pulp, paper, printing and publishing of instructional materials; establishing or operating vocational or technical institutes; or carrying on business in logistics and warehousing, information technology or commercial farming.
  • Must invest a minimum of USD 10m for foreign investors and USD 300,000 for EAC citizens or USD 150,000 where the investment is made upcountry.
  • Incentive takes effect from the date of commencement of the specified business, same incentives applies to an existing operator in an Industrial
  • Park or Free Zone. The investor must use at least 70% of locally sourced raw materials and employ at least 70%
  • EAC citizens who must take up at least 70% of the wage bill.
Exemption of Income derived by a person from undertaking the agro – processing.
  • One Year. May be renewed annually
  • Investor must use plant and machinery that has not previously been used in Uganda, apply for and be issued with a certificate of exemption from URA and must be tax compliant.

For more information, visit the nearest URA office or call the toll-free lines 0800117000/0800217000 or WhatsApp: 077214000

 

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