Uganda Implements New Tax Laws for 2023/2024 Fiscal Year

Uganda Tax Laws Updated for 2023 2024 Fiscal Year
PHOTO - Independent - Uganda's Tax Laws Updated for 2023/2024 Fiscal Year
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In the pursuit of bolstering Uganda’s domestic revenue mobilization strategy and improving the tax compliance and regulatory environment, several amendments have been introduced to the country’s tax laws. Ms. Stella Nyapendi Chombo, Acting Commissioner of Legal Services and Board Affairs at the Uganda Revenue Authority, sheds light on these changes in a discussion with Racheal Nabisubi of Prosper Magazine.

The amendments to Uganda’s domestic tax laws for the fiscal year 2023/2024 were formally assented to by the President of Uganda on August 5th. These changes encompass the Income Tax (Amendment) Act 2023, the Value Added Tax (Amendment) Act 2023, the Excise Duty (Amendment) Act 2023, the Tax Procedures Code (Amendment) Act 2023, Lotteries and Gaming (Amendment) Act 2023, the Stamp Duty (Amendment) Act 2023, and the Stamp Duty (Amendment) Act 2023. Additionally, aspects of Islamic Banking have been incorporated into the tax laws through the Value Added Tax (Amendment) Act (No.2) 2023, the Income Tax (Amendment) Act (No.2) 2023, and the Excise Duty (Amendment) Act (No.2) 2023.

The process leading to these changes is governed by the legislative process and commences with an annual call for proposals, inviting Uganda Revenue Authority staff to submit suggestions for amending the tax laws they have implemented throughout the year. This call typically takes place in August and aligns with the national budget cycle managed by the Ministry of Finance, Planning, and Economic Development.

Proposals generated during this stage undergo thorough deliberation, including discussions at an inter-department forum. These proposals, which also extend to customs, are consolidated and reviewed by the management of both departments before being presented to the URA’s leadership for approval.

Subsequently, the Ministry with oversight over URA leads the process to involve the First Parliamentary Counsel from the Ministry of Justice and Constitutional Affairs, along with the Finance Committee of the Parliament of Uganda. This culminates in the parliamentary procedure through which the bills are enacted into law.

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The notable changes introduced in these statutes encompass a broad spectrum of substantive and administrative matters. They include the repeal of initial allowance, the imposition of a cap on carry forward losses, amendments to income tax, the introduction of digital service tax, enhanced penalties, amendments to the tax procedure code, the enactment of a new law for cross-border automatic exchange of information in Uganda, and legislation to facilitate the implementation of Islamic banking and finance in Uganda.

An Alternative Dispute Resolution mechanism was also introduced, providing taxpayers with a means to resolve tax disputes through negotiation and mediation with the tax authority, thus saving time and costs.

In the current fiscal year, the Convention on Mutual Administrative Assistance in Tax Matters (Implementation) Act 2023 has been introduced to boost voluntary compliance, taxpayer registration, and combat tax fraud and evasion.

To benefit from the newly assented tax laws, taxpayers can take advantage of options such as the “Penalty Waiver” introduced under Section 40D of the Tax Procedure Code (TPC) Act. This allows taxpayers to avoid interest and penalties by reconciling tax ledgers and clearing outstanding principal taxes by December 31, 2023.

To promote understanding of the amended laws, the Uganda Revenue Authority has initiated efforts to enhance tax education among stakeholders. This includes internal stakeholders, the business sector, accountants, lawyers, and other experts who play crucial roles in guiding and supporting taxpayers in their compliance with URA and tax regulations. Additionally, a practice note regarding the waiver of interest and penalties under section 40D of the TPC has been published to facilitate effective management of tax arrears and revenue collection.

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