On 28 March 2019, Mr. Matia Kasaija, the Minister of Finance, Planning and Economic Development (Minister of Finance) of Uganda presents a number of tax reforms amendment bills to the Ugandan parliament and are currently under consideration. The key tax reforms measures include:
- A person who has rental income from more than one rental property, the income, expenses and tax for each of the properties must be shown separately. It will make sure that a taxpayer with multiple rental properties does not adjust tax losses with other properties;
- A taxpayer will be subject to 0.5% tax on gross turnover if that person has carried forward losses for 7 consecutive years, tax applies from the 8th year.
- The bill proposes 6% withholding tax on the purchase of a business or business asset by residents;
- Tax reform bill introduces a reduction in the minimum investment to USD 50 million from USD 100 million for industrial park developers. The bill also proposes to decline the minimum investment threshold to USD 10 million from USD 15 million for foreign investors and to USD 2 million from USD 5 million for domestic investors in relation to the tax holiday for industrial park and free zone operators and other businesses outside industrial parks and free zones, as well as an addition of the holiday period from 5 years to 10 years;
- The introduction of exclusion for financial institutions and insurance companies from the 30% of Earnings before interest, tax, depreciation and amortization (EBITDA) interest deduction restriction for related party debt, which was introduced in 1 July 2018;
- The bill recommends a reduced 10% withholding tax rate (currently 20%) on government securities with a maturity period at least 10 years; and
- Exemption on interest income from infrastructure bonds with a maturity period of at least 5 years.
The legislation will effect from 1 July 2019, subject to approval.
