How to reduce Taxes payable when staritng a BUSINESS IN UGANDA
Question: How can I reduce my tax payable if I started a business in Uganda?
Answer: This always depends on the location of your business in Uganda (for the Initial Allowance deductions) and the nature of business you are engaging in as there are various ways in which your taxes payable could be reduced by the different investment incentives that the Uganda government gives.
Below are some of the incentives that can help investors reduce taxes they pay.
A) Investment Capital Allowances
• Initial capital allowance on plant and machinery 50-75% • Start up cost spread over 4 years 25% p.a. • Scientific research expenditure 100% • Training expenditure 100% • Mineral exploration expenditure 100% • Initial Allowance on hotel, hospitals and Industrial buildings 20% • Deductible annual Allowances (depreciable assets) Depreciation rates of assets range. 20-40% • Depreciation rate for Hotels, Industrial Buildings and Hospitals 5%
B) Duty and Tax free import of Plant & Machinery.
C) First Arrival Privileges in the form of duty exemptions for personal effects and motor vehicle (previously owned for at least 12 months) to all investors and expatriates coming to Uganda.
D) Export Promotion Incentives and Facilities
•Manufacturing under Bond. • Duty exemption on plant and machinery and other inputs• Stamp duty exemption • Duty draw back – a refund of all or part of any duty paid on materials, inputs imported to produce for export • Withholding tax exemptions on plant & machinery, scholastic materials, human & animal drugs and raw materials. • Ten year tax holiday • Duty remission scheme for exporters involved in value addition.
Also note that organizations that engage in mergers and acquisitions depending on the structuring can be able to reduce the tax payable for instance in the case of Heritage Oil Vs Tullow Oil, Tullow oil reduced their tax payable.