Where foreign interest income is exempt from tax in the source country, how does URA apply double taxation principles when assessing tax liabilities in Uganda?
Dear Reader,
Where foreign interest income earned by a Ugandan resident is not taxed in the source country, Uganda retains the primary taxing right as the country of residence. URA requires the foreign interest income to be declared as part of the resident’s worldwide income and taxed under the Income Tax Act. Since no tax was paid, no foreign tax credit is available. Therefore, the issue of double taxation only arises where tax has actually been suffered in both jurisdictions.
Does URA believe that foreign tax credits alone adequately address concerns about fairness where no foreign tax has been paid?
Dear Reader,
Foreign tax credits are one of the key mechanisms for relieving double taxation by allowing taxpayers to offset tax paid abroad against their Ugandan tax liability. In addition, Uganda’s network of Double Taxation Agreements helps prevent double taxation by allocating taxing rights between countries and, in some cases, limiting the tax payable in either jurisdiction. Where no foreign tax has been paid, no credit is available, and the income is taxed in Uganda in accordance with the Income Tax Act.
How does URA ensure that the current framework does not result in disproportionately high taxation of foreign passive income compared to equivalent domestic income?
Dear Reader,
Uganda’s tax system taxes residents on their worldwide income and seeks to balance fairness with the principle that all income should contribute to the tax base, regardless of where it is earned. The different treatment of some foreign and domestic passive income arises from the provisions of the Income Tax Act and applies equally to all tax residents. In addition, foreign tax credits and double taxation agreements are available, where applicable, to mitigate double taxation and support equitable taxation of cross-border income.
Taxpayer Guidance and Future Reforms
Would URA consider issuing detailed public guidance to help taxpayers better understand the taxation of foreign interest income and the application of tax treaties?
Dear Reader
URA continues to provide guidance through taxpayer education programmes, public notices, and the Voluntary Disclosure Programmes. Taxpayers are encouraged to disclose offshore income, claim available treaty benefits and foreign tax credits, and seek guidance from URA where clarification is required.
What are the current rules governing Ugandans returning permanently from abroad who wish to import personal motor vehicles into Uganda?
Dear Reader,
Returning Ugandans can benefit from exemption in respect to personal effects including motor vehicles as provided under the East African Community Customs Management Act (EACCMA) where they meet the following conditions:
- The returning resident must have owned and used the motor vehicle for at least 12 months and the vehicle should have been registered in the name of the returning resident;
- The returning resident’s stay in the foreign country should not have been interrupted within the 12-month period;
- The motor vehicle is required to be within Uganda not later than 90 days after the return of the resident person.
- The motor vehicle’s year of manufacture and should not exceed 14 years from the current year.
Please note that a returning resident shall benefit from tax relief on only one motor vehicle.
Can a returning resident legally import a 2006 model vehicle and register it in Uganda, and if so, what conditions and taxes would apply?
Dear Reader,
No. The Traffic and Road Safety Act of Uganda prohibits the importation of motor vehicles that are 15 years or older from the year of manufacture. A 2006 model vehicle therefore exceeds the allowable age limit and cannot be imported for registration in Uganda.
Are there any exemptions, concessions or special customs arrangements available for returning Ugandan citizens bringing personal vehicles back home?
Dear Reader,
Yes. Under, the East African Community Customs Management Act (EACCMA), 2014 returning residents may receive relief from Customs duties in respect to personal effects including motor vehicle provided they meet the prescribed ownership, use and importation conditions applicable to returning residents i.e.;
- The returning resident must have owned and used the motor vehicle for at least 12 months and the vehicle should have been registered in the name of the returning resident;
- The returning resident’s stay in the foreign country should not have been interrupted within the 12-month period;
- The motor vehicle is required to be within Uganda not later than 90 days after the return of the resident person.
Please note that a returning resident shall benefit from tax relief on only one motor vehicle.
What documentation is required for a returning resident seeking to register an imported vehicle and obtain Ugandan number plates?
Dear Reader,
A returning resident should provide documents supporting their change of residence status, including travel and residency records, proof of ownership and use of the vehicle, and any other documentation required by Customs and registration authorities.
The documentation required for registration of a motor vehicle for a returning resident could include:
- Recommendation of the embassy of that country, showing that that person is returning.
- If one had a permanent residence in that country, in the passport, it should be showing that it has expired or been removed from his/her passport.
- A holder of a foreign passport is not a citizen of Uganda, unless when such a person comes here for work and gets a work permit, this one can still enjoy the facility, as one who is changing residence.
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