TAX WAIVER
What is a Tax Waiver?
A tax waiver is a relief from paying tax for a specific period of time and is provided for under a specific tax law. In simple terms, a tax waiver is where government grants taxpayers an opportunity not to pay specific taxes, penalty and interest either fully or partially. The relief is administered by the Uganda Revenue Authority.
The tax waiver is provided for under the Tax Procedures Code Act (TPCA).
A tax waiver is usually granted under special circumstances, for example:
- To promote voluntary compliance- a reward of those who come clean early;
- Financial hardship – For example those created by the COVID-19 Pandemic;
- To cut operational costs where taxpayers go to court.
A tax waiver usually covers penalties and interest under the Domestic Tax Laws, namely; the Income Tax Act, Value Added Tax Act, Excise Duty Act, Lotteries and Gaming Act, and Stamp Duty Act.
Key Points about a Tax Waiver:
- It must be provided for under the tax law;
- Covers specific items including interest and penalties;
- It is automatic where a taxpayer meets the conditions specified by the tax law;
- It reduces or eliminates tax liability but does not change future obligations (you still have to comply with taxes going forward).
The tax waiver is provided for under Section 47B of the TPCA and previously under 47A, 47 and 46 of the TPCA.
How it will be applied
A taxpayer shall benefit from 100% waiver of penal tax and interest outstanding as at 30th June 2024 where the taxpayer pays all of the principal tax by 30th June 2026.
Where a taxpayer pays part of their principal tax outstanding as at 30th June 2024 by 30th June 2026, the interest and penalty shall be waived on a pro-rata basis (to the extent of the principal tax paid).
Interest and penalty charged on outstanding principal tax after 30th June 2024 shall be covered under this provision.
Interest and penalties relating to principle tax for periods whose due date is after 30th June 2024 are not covered under this waiver.
Exceptions:
The waiver does not cover any penalty and interest not related to principal tax, such as:
- Penal tax for failure to provide information;
- Penal tax in relation to digital tax stamps;
- Penal tax in relation to non-compliance with EFRIS;
- Penalty for failing to apply for registration;
- Court imposed penalty and interest.
