Withholding Tax (6%) Challenges
Who is supposed to withhold 6% tax on transactions above UGX 1 million?
Dear Reader,
The obligation to withhold arises where the Government of Uganda, a government institution, a local authority, any company controlled by the Government of Uganda or any person designated as a withholding agent by the Minister of Finance Planning and Economic Development pays an amount exceeding shs 1 million to any person in Uganda for a supply of goods or for a supply of services. The payer is required to withhold 6% on the gross amount of the payment and issue a receipt to a payee.
What recourse does a supplier have when a designated withholding agent refuses to pay tax withheld as required?
Dear Reader,
Withholding tax is a creditable tax that can only be utilized when you file an income tax return for that period.
When a Withholding tax agent withholds from a supplier, they are required to file the WHT return indicating the supplier’s TIN and make payment. After the return is filed, the supplier should be able to generate their tax credit certificate. If a return is not filed indicating the TIN of the supplier, then they are not able to get their tax credit certificates.
Where the Withholding Agent fails to file the Withholding tax return and make payment of the tax withheld, the supplier may share information with us through our Integrity, Compliance and Ethics Division via our toll-free number 0800257700 or lodge a complaint through the web portal following the procedure below:
- Visit the URA web portal, ura.go.ug
- At the bottom left, select the whistle blow icon.
- Fill in the form
- On the last page, attach evidence to show deduction(s) made.
Informal Businesses & Worker Protection
What mechanisms does URA have to identify and bring into the tax net businesses operating without proper registration or traceable identity?
Dear Reader,
URA collaborates with other government agencies including Uganda Registration Services Bureau [URSB], Kampala Capital City Authority [KCCA], Uganda Investment Authority [UIA] and Ministry of Local Government through the Taxpayer Register Expansion Programme (TREP) to provide a One Stop Centre with the aim of supporting business formalization.
To encourage business formalization, the Law provides for a three-year tax incentive (Income Tax exemption) for anyone who registers their business after 1st July 2025. URA is encouraging taxpayers to register their businesses and benefit from this income tax exemption.
How can the public or employees report non-compliant businesses that exist to URA?
Dear Reader,
Transparency in business requires that income and expenses are fully declared for fair assessment of tax and avoidance of penalty.
Where a taxpayer is not remitting the actual tax due, URA has availed different channels through which the public may offer this information and these include:
- Visiting the nearest URA office;
- Our email address; services@ura.go.ug;
- Toll-free numbers; 0800117000 and 0800217000;
- WhatsApp line; 0772140000;
- Our website; touchpoint.ura.go.ug;
- Our Whistle blow page accessible through the procedure below;
- Access the URA web portal, ura.go.ug;
- Under Domestic Taxes, select “Whistle Blow”;
- Fill in the required sections and upload supporting; documentation, if any;
- Submit the information.
Where enough information has been provided, URA will take appropriate action including raising additional assessments and penalizing the taxpayer to discourage such behavior.
Please note that any information submitted to URA will be treated with utmost confidentiality.
Education Sector & Market Fairness.
What is URA’s position on schools engaging in commercial activities such as selling scholastic materials at marked-up prices?
Dear Reader,
A school that engages in commercial activities is required to file Income tax returns and account for the profit generated from the sale of the scholastic materials. The school may be taxed under the Individual tax rates (where the school is owned by an individual) or at corporation tax rate (where the school is operated as a company).
Where the scholastic materials sold at the school are produced locally or in a partner state of the East African Community then the supply is zero rated for Value Added Tax purposes.
Does the sale of scholastic materials at marked-up prices by schools align with government policy on taxation and fair market competition?
Dear Reader,
URA’s mandate is to assess, collect and account for all revenue and advise Government on matters of tax policy.
In executing this mandate, URA works with other Government agencies like Ministry of Education and Sports which regulates the education sector. For any concerns regarding school practices, kindly visit the Ministry of Education and Sports’ offices at Embassy House, King George VI Way or Legacy Towers, Kyadondo Road, Nakasero.
How does restricting parents to purchase only from schools affect tax compliance and the broader retail economy?
Dear Reader,
Restricting parents to purchase only from schools does not affect tax compliance. However, there will be compliance issues where the school has failed to declare the correct income in its income tax returns.
Are there tax relief measures, payment plans, or incentives specifically designed for small and medium enterprises (SMEs)?
Dear Reader,
URA avails payment plans to clients regardless of the size of the business. 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.
Additionally, the law provides an income tax exemption for income derived by a business established by a citizen after 1st July, 2025, for a period of three years where the-
- Business is registered with an investment capital not exceeding five hundred million shillings.
- Citizen or an associate of the citizen has not previously benefited from the exemption; and
- Citizen files a tax return including business information return referred to in section 147 in the format prescribed by the Commissioner General.
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