Automatic Exchange of Information (AEOI) is a systematic and periodic transmission of “bulk” non-resident taxpayer information by the source country to the residence country concerning various categories of income (e.g. dividends, interest, royalties, salaries, pensions, etc.

In simple terms, Automatic Exchange of Information (AEOI) is a global initiative to provide for the exchange of non-resident financial account holders’ information with the tax authorities in the account holders’ country of residence.

Countries that have subscribed to the standard are required to send and receive pre-agreed information each year, without receiving a request.

Legal basis for AEOI in Uganda. For Uganda, the Convention on Mutual Administrative Assistance in Tax Matters (Implementation) Act, 2023 domesticates the OECD Multilateral Convention on Mutual Administrative Assistance in Tax Matters (the MAAC), The Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information (the MCAA) and the Common Reporting Standard (contains the reporting and due diligence and reporting obligations for AEOI reporting financial institutions).

For Uganda, the Convention on Mutual Administrative Assistance in Tax Matters (Implementation) Act, 2023 domesticates the OECD Multilateral Convention on Mutual Administrative Assistance in Tax Matters (the MAAC), the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information (the MCAA) and the Common Reporting Standard (contains the reporting and due diligence and reporting obligations for AEOI reporting financial institutions).

Globalisation has made it easier for people to invest money outside their tax residence jurisdiction. This has provided opportunities for offshore tax evasion.

AEOI is a powerful tool designed to tackle this issue by enhancing transparency and improving tax compliance.

• Provides timely information on noncompliance where tax has been evaded

• Detects cases of non-compliance even where tax administrations have had no previous indications of non-compliance.

• Enhances voluntary tax compliance and deters tax evasion.

• Increases tax revenue for Uganda’s economic development.

• Ensuring that all taxpayers pay their fair share of tax and p

• Custodial institutions;

• Depository institutions;

• Investment entities; and

• Specified insurance companies

Financial accounts include –

• Custodial accounts;

• Depository accounts;

• Equity or debt interests in investment entities; and

• Cash value insurance contracts and annuity contracts.

The following types of information can be exchanged as part of the Common Reporting Standard for all reportable accounts:

1. Identification Information: Account holder/controlling person name, address and jurisdiction of residence for tax purposes, tax identification number (TIN), date and place of birth (in the case of an individual), In the case of any Entity that is an Account Holder and that, after application of due diligence procedures, is identified as having one or more Controlling Persons that is a Reportable Person, the name, address, and TIN(s) of the Entity and the name, address, TIN(s) and date and place of birth of each Reportable Person;

2. Account Information: Account number (or functional equivalent in the absence of an account number), Name and identifying number of the reporting financial institution

3. Financial information to be reported, depending on the type of account, is as below:

This data exchange requires Uganda to have measures in place to ensure the highest standards of confidentiality and data safeguards.

The exchange of data between financial institutions and the Tax Administration for automatic exchange is achieved through the provision of secure, point-to-point communications.

The exchange of data between the Tax Administration and the OECD GF is carried out via the OECD’s centralised secure platform, i.e. the Common Transmission System (CTS).

A reporting financial institution shall report or submit a return to URA, providing the information on the account held by a non-resident person or on a reportable account for the year ending 31st December in every calendar year and by the 31st day of May of the following year.

Where a reporting financial institution applies the procedures of due diligence for a calendar year, and no financial account is identified as a reportable account, the reporting financial institution shall file a Nil return.

Due Diligence: The due diligence requirements under AEOI vary depending on whether the account is a New Account or a Pre-Existing account.

The term “Preexisting Account” means a Financial Account maintained by a Reporting Financial Institution as of 31st December, 2023.

The term “New Account” means a Financial Account maintained by a Reporting Financial Institution opened on or after 1st of January 2024

If the Reporting financial institutions fail to report information within the period as stated in the regulation or reported information is incomplete, incorrect or fraudulent, this shall lead to the following fines or penalties according to the provisions of Section 8 of The Convention on Mutual Administrative Assistance in Tax Matters (Implementation) Act, 2023.

I. (a) sets a fine equivalent to UGX 5,000,000 for failure to file returns for purposes of Automatic Exchange of Information. This is to be paid for each day of default.

II. (b) sets a fine equivalent to UGX 10,000,000 for failure to maintain records of due diligence processes.
It also sets an additional fine equivalent to UGX 400,000 for each day the Reporting Financial Institutions continue to violate this act.

III. (e) sets a fine equivalent to but not more than UGX 50,000,000, or imprisonment for not more than 10 years, or both, to the person who makes a false or misleading statement in a return for purposes of the Automatic Exchange of Information

IV. (f) sets a fine equivalent to but not more than UGX 50,000,000, or imprisonment for not more than 10 years, or both, for an account holder or controlling person who submits a false or misleading self-certification for purposes of Automatic Exchange of Information.

V. (g) sets a fine equivalent to but not more than UGX 50,000,000, or imprisonment for not more than 10 years, or both, for Reporting Financial Institutions that omit information from statements made in a return for purposes of Automatic Exchange of Information.

AEOI implementation for Uganda will be carried out by the Information Security Management Standard (ISO 27001) and the standard
of internet security, which includesan independent and highly secure protective information network and computing system, security monitoring equipment, system application or authorisation of use, data storage records, risk and control management, backup plans and procedures of handling confidential documents, to avoid the possibility of any leakage or malicious intrusion during data transmission and storage.

At the same time, URA-AEOI staff must comply with relevant standards and procedures in handling information. 
In addition, URA will only transmit information requested by the competent authorities of the contracting countries, which have signed automatic exchange of information agreements with URA.

The Multilateral Competent Authority Agreement (MCAA) also requires the competent authorities of the contracting parties to have the same level of information security standards. The security standard in various jurisdictions will be assessed by international organizations to ensure that the information involved in the AEOI will be protected in a highly confidential environment.

A financial institution resident (read “located”) in Uganda will identify the financial accounts of non-residents
(individuals or entities) liable to tax because of residence in a jurisdiction other than Uganda.

The financial institution will collect and furnish to the Uganda Revenue Authority (URA) information of the identified account holders (individual or entity) and the financial account information on an annual basis. URA will then transmit the information to the tax administration of the relevant jurisdiction in which the account holder is tax resident.

Reporting financial institutions will be liable for reporting on financial accounts held by reportable persons. Ugandan taxpayers who are not tax residents of any jurisdiction outside Uganda will not be reported.

Section 6 of the Convention on Mutual Administrative Assistance in Tax Matters (Implementation) Act, 2023 requires the reporting financial institutions to apply due diligence procedures to collect all required information and documentation from account holders.

To identify reportable persons, reporting financial institutions may ask account holders to complete self-certification forms for verification of their tax residency status.

This is a formal declaration that the account holder makes in connection with his/her tax residence. If the account holder has doubts about his/her tax residence, he/she may consider seeking professional advice.

An account holder or controlling person who knowingly or recklessly provides a statement that is misleading, false or incorrect in a material particular in making a self-certification for a reporting financial institution for purposes of Automatic Exchange of Information is liable on conviction to a fine equivalent to but not more than UGX 50,000,000, or imprisonment for not more than 10 years, or both. URA may check the details of the self-certification, if necessary.

Under the Convention on Mutual Administrative Assistance in Tax Matters (Implementation) Act, 2023, reporting financial institutions are required to apply the due diligence procedures to identify the tax residency of the account holders and controlling persons for AEOI. Therefore, an account holder is required to provide their tax residency to a reporting financial institution.

According to the due diligence procedures set out in the Convention on Mutual Administrative Assistance in Tax Matters (Implementation) Act, 2023, account holders have to provide self-certifications to the reporting financial institution in respect of their personal information, including tax residence, for all new accounts.

For pre-existing accounts, financial institutions will be required to conduct due diligence procedures to identify and verify the tax residence of the account holders. In case of doubt, self-certification from account holders will be sought.

Furthermore, financial institutions can opt to apply the due diligence procedures of new accounts to pre-existing accounts.
In other words, an account holder may have to provide a self-certification to a reporting financial institution regarding the pre-existing accounts

Account holders should advise the reporting financial institutions of any change in circumstances which affect their tax residency status or causes the information contained in a self-certification to become incorrect. Generally, account holders should provide financial institutions with a suitably updated self-certification form within 30 days of such change in circumstances.

Tax residence is determined under the domestic tax laws of each jurisdiction. There might be situations where a person qualifies as a tax resident under the tax residence rules of more than one jurisdiction, and Therefore is a tax resident in more than one jurisdiction. For the purposes of the CRS, Financial Institutions must ensure that Account Holders (or Controlling Persons) disclose all tax residences in the required self-certification.

Additionally, if a person has paid taxes charged by a jurisdiction (say, value-added tax, withholding tax or capital gains tax), this does not automatically render that person a tax resident of that jurisdiction.

If the account holder has doubts about his/ her tax residence, he/she may consider seeking professional advice.

In OECD’s Automatic Exchange Portal, you can find more information regarding the tax residency rules applicable to different jurisdictions. The information can be accessed via the following link:
https://www.oecd.org/tax/automaticexchange/crs-implementation-andassistance/tax-residency/#d.en.34776

For purposes of AEOI, If you are not a tax resident in any jurisdiction outside Uganda, the financial institution is not required and should not report your
financial account information to URA for transmission to any tax administration outside Uganda.

If you are a tax resident of Country A in accordance with its tax law, Bank Z will report information in the joint account (in entirety, with no apportionment) to URA for transmission under AEOI to the tax administration of Country A. Bank Z is not required to report the information of your spouse who is not a tax 
resident in any country outside Uganda.

Provided that you are not a tax resident of Country B under its tax laws, the ownership of a property in Country B and your liability to pay taxes due to Country B alone will not automatically render you a tax resident of Country B.

No. The account holder is the beneficiary, not the agent, of the account. You are not the account holder, but your spouse.

Since your spouse is not a tax resident of Country C, the account information will not be exchanged. Only information of a financial account of which the beneficiary, and not the agent, is a tax resident of Country C will be exchanged.

Each jurisdiction has its specific definition of tax residence. Tax laws may differ amongst jurisdictions and the tax residence of individual account holders may change from one year to another.
Individual account holders ought to verify and update their tax residence and seek legal advice if necessary.

For new accounts, financial institutions will seek self-certification from account holders in respect of their personal information, including tax residence.
For pre-existing accounts, financial institutions will be required to conduct due diligence procedures to identify and verify the tax residence of the account holders.
In case of doubt, self-certification from account holders will be sought.

For AEOI purposes, a person meeting the following criteria is regarded as a tax resident of Uganda;

1. An individual is a resident individual
for a year of income if that individual

a. has a permanent home in Uganda;
b. is present in Uganda –

(i) for a period of, or periods amounting in aggregate to, 183 days or more in any twelve-month period that commences or ends during the year of income; or

(ii) during the year of income and in each of the two preceding years of income for periods averaging more than 122 days in each such year of income; or

c. is an employee or official of the Government of Uganda posted abroad during the year of income.

2. A company is a resident company for a year of income if it

a. is incorporated or formed under the laws of Uganda;
b. has its management and control exercised in Uganda at any time during the year of income; or
c. Undertakes the majority of its operations in Uganda during the year of income.

3. A trust is a resident trust for a year of income if –

a. the trust was established in Uganda;

b. at any time during the year of income, a trustee of the trust was a resident person; or

c. the trust has its management and control exercised in Uganda at any time during the year of income.

4. A partnership is a resident partnership for a year of income if, at any time during that year, a partner in the partnership was a resident person.