Hotel and Accommodation sector

The hotel and accommodation sector is a branch of hospitality industry that involves establishments that provides travelers with shelter/ lodging, food, refreshment, and recreational services like entertainment, and personal services on a commercial basis.

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The Income tax act defines an approved hotel as an industrial building licensed by the appropriate authorities for use, at a price, for boarding and lodging with at least;

  • Ten bedrooms with minimum facilities of bed and breakfast, toilet and bath or shower room; and
  • Restaurant or dining room for provision of food and beverages

These can include resorts hotels/suites, apartment

Hotel accommodation means is a hospitality facility that offers rooms or beds to tourist or visitor on a commercial basis but excludes services like food, recreation or entertainment.

All businesses in the hotel and accommodation sector in Uganda are required to be registered with;

  • Uganda Registration Services Bureau (URSB) you will receive either a Certificate of registration (if registered in your own names or business names or Certificate of Incorporation if registered as a Limited liability Company.
  • Uganda Revenue Authority (URA) for taxes
  • Local council authority e.g. KCCA, municipal council, for a trading license

Please note:

Upon registration companies in the hotel and accommodation sector are required to comply with the requirements of relevant authorities like;

  • Ministry of Tourism, Wildlife and Antiquities
  • Uganda tourism board

For individual

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

For non-individual

  • Company Form 20
  • Certificate of incorporation

Click here for details on requirements for registration

  • You’re required to visit the URA portal on ura.go.ug

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.

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 UGX or 37.5 million UGX for 3 consecutive months.

Click here for more information on VAT

Please note

It is mandatory for all VAT registered taxpayers to issue e-invoices or e-receipts as no tax credit is allowed or claimable on purchases unless they are supported by e-invoices or e-receipts.

Click here to register on EFRIS

Local Hotel Tax (LHT)?

This is a tax levied and paid by room occupants of Hotel and lodges.

  • It is levied on hotel and room accommodation per room per night and is paid by the room occupant.
  • The tax is collected by the management of the hotel, which remits the same to KCCA/ Municipal or Town Council on a monthly basis.

Please note

For income tax purposes this is not allowed as an expense to the hotel owner as this revenue is not recognized in the records of the hotel owner and should thus be paid to the local authorities as and when received by the hotel management.

SN

Hotel category

Rate

1

Five and Four star hotels.

US $ 2 per room per night

2

Three, Two star hotels and other hotels charging above 50,000/= per night

 

2000/= per room per night

3

Hotels, lodges and Guest houses charging 10,000/= up to 50,000/= per night.

1000/= per room per night

4

Hotels, lodges and Guest houses charging 10,000/= up to 50,000/= per night.

500/= per room per night

 

Corporation tax

This is tax charged on profits of the hotel and chargeable on hotel or accommodation taxable income.  The income tax rate applicable to the chargeable income of companies is 30%, 

Pay As You Earn (PAYE)

Any person dealing in transport business and has workers earning a monthly salary more than 235,000 per month is required to register for Pay as You Earn (PAYE), withhold and remit tax to URA.

Click here for the PAYE rates

Withholding tax

Withholding tax (WHT) is income tax that is withheld at source by one person (withholding agent) upon making payment to another person (payee). The rate is 6% withheld and remitted to URA

Please note

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

Click here for information on Withholding tax.

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 the resultant tax using any of the available payment platforms e.g. banks, mobile money, EFT, RTGS, VISA, Mastercard, 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

 

INCOME TAX

Beneficiary

Incentives

Period of Incentive

Conditions for the Tax Incentive

1.Private employers of persons with disabilities (PWDs)

Income derived by a person from undertaking any of the listed business activities in the Industrial Park or Free Zone.

Indefinite

5% of employees must be PWDs

2.Non-profit making Organizations

Income tax exemption

Indefinite

Where the Commissioner has issued a written ruling stating that it is exempt

3.Compliant taxpayers

6% WHT exemption on payment for goods and services and professional fees

12 months renewable

Where the Commissioner is satisfied that the taxpayer has regularly complied with the obligations under the tax laws

4.All taxpayers

100% deduction of Scientific research expenditure

Indefinite

A person who incurs expenditure for scientific research

5.All taxpayers

100% deduction of training expenditure

Indefinite

Employers who train permanent residents or provide tertiary education not exceeding in the aggregate 5 years

6.All taxpayers

Initial allowance and Depreciation allowance: Initial Allowance – capital deduction of 50% of qualifying Plant & machinery and 20% on Industrial building placed in the radius of 50Km outside the boundaries of Kampala. Person who places depreciable assets in service

Indefinite

All taxpayers with depreciable assets

 

e.g. computers, automobiles, specialized trucks, tractors, plant and machinery used in farming, manufacturing or mining operations, trailers and trailer mounted containers; and Industrial building deduction of 5% on cost of construction straight line method for 20 years

 

 

7. All taxpayers

Carry forward losses: Assessed loss is carried forward as a deduction in the following year of income.

Duration of the loss

All taxpayers

8.

Investor established in a country with which

Uganda has a DTA

Double Taxation Agreements (DTA): Investors from countries with active DTA’s with Uganda i.e. United Kingdom, Denmark, Norway, South Africa, India, Italy, Netherlands and Mauritius. Withholding tax rates applicable to dividends, interests, management fees and royalties are 10% except UK at 15%

Duration of the DTA

Beneficial owner of investment as defined in the Income Tax Act established with economic substance in a country with which Uganda has a DTA.

VAT ACT

 

Beneficiary

Incentives

Period of Incentive

Conditions for the Tax incentive

 

1. Developer of a hotel or tourism facility

No VAT on the supply of feasibility study, design and construction services; or on the supply of locally produced materials

Duration of the development

The hotel developer must invest at least USD 8m. The feasibility studies must be for the development of a hotel or tourism facility or the supply of machinery and equipment furnishings or fittings (not available on the market). The hotel or tourism facility must have a room capacity exceeding 30 guests. A developer of a facility for meetings, conferences and exhibitions whose investment capital is not less than one million United States Dollars.

 

2. VAT Registered taxpayers

VAT registered persons claim all the VAT incurred.

Indefinite

Turnover of UGX 150m in any 12-month period for first time registration, ability to keep proper books of accounts and making taxable supplies.

 

 

 

STAMP DUTY ACT

 

Beneficiary

Incentives

Period of Incentive

Tax incentive

 

1. Hotel or tourism developer

Nil Stamp Duty on debenture, further charge, lease of land, increase of share capital, transfer of land and agreement to provide services on conducting a feasibility study or developing a design for construction.

Duration of the development

Must invest at least USD 8m.

Hotel or tourism facility should have room capacity exceeding one hundred guests

 

2. Strategic investments (specified in Item 60

A (iii) of the Second

Schedule of the Stamp Duty Act)

Nil stamp duty

Indefinite

Investor must have

a.       Capacity to use at least 50% of the locally produced raw materials, subject to availability

b.       Have capacity to use 50% of raw materials sourced locally and;

c.       Be able to employ a minimum of 100 citizens

 

3.Loan applicants

NIL stamp duty on an agreement relating to the deposit of title- deeds, pawn pledge-of the total value.

Indefinite

Agreement relating to the deposit of title- deeds, pawn pledge-of the total value.

 

4. Loan applicants

NIL stamp duty on security bond or mortgage deed.

Indefinite

Security bond or mortgage deed executed by way of security for the due execution of an office, or to account for money or other property received by virtue of security bond or mortgage deed executed by a surety to secure a loan or credit facility-of entry value.

 

                     

 

Any of the following goods engraved or printed or marked with the hotel logo imported by a licensed hotel for its use

 

 

Description

Tax incentive

 

a) Washing machines Machine for washing clothes, bed linens, etc.

•    Exempted from all taxes under the 5th schedule of the East African Community Customs Management Act, 2004

 

b) Kitchen ware Instruments and utensils found in a kitchen,particularly those associated with the preparation and serving of food.

•    Exempted from all taxes under the 5th schedule of the East African Community Customs Management Act, 2004

 

c) Cookers Utensil, device, or apparatus for cooking

•    Exempted from all taxes under the 5th schedule of the East African Community Customs Management Act, 2004

 

e) Air conditioning systems A system used for cooling and drying the air in a building, room, etc.

•    Exempted from all taxes under the 5th schedule of the East African Community Customs Management Act, 2004

 

f) Cutlery Edged or cutting tools specifically implements for cutting and eating food.

•    Exempted from all taxes under the 5th schedule of the East African Community Customs Management Act, 2004

 

g) Televisions A device that receives elevision signals and reproduces them on a screen

•    Exempted from all taxes under the 5th schedule of the East African Community Customs Management Act, 2004

 

h) Carpets, A carpet is a textile floor covering typically consisting of an upper

layer of pile attached to a backing

•    Exempted from all taxes under the 5th schedule of the East African Community Customs Management Act, 2004

 

i) Furniture

Large movable equipment, such as tables and chairs, used to make a house, office, or other space suitable for living or working

•  Exempted from all taxes under the 5th schedule of the East African Community Customs Management Act, 2004

 

j) Linen and curtains Linen:

Sheets, pillowcases, and

duvet covers Curtain: A piece of material suspended at the top to form a covering or screen, typically one of a pair at a window

•   Exempted from all taxes under the 5th schedule of the East African Community Customs Management Act, 2004

 

k) Gymnasium

equipment Exercise equipment is any apparatus or device

used during physical activity to enhance the strength or conditioning ects of that exercise by providing either fixed or adjustable amounts of resistance, or to otherwise enhance the experience or

outcome of an exercise routine

•   Exempted from all taxes under the 5th schedule of the East African Community Customs Management Act, 2004

 

2) Bathrobes

•    Import duty is applicable at a rate of 0% instead of 25% for one year when imported by a licensed hotel.

 

3) Clothes-dryers

•    Import duty is applicable at a rate of 0% instead of 25% for one year when imported by a licensed hotel.

         

 

Click here to download Taxation on Hotel and Accommodation Sector Guide
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