A Guide On Tax Incentives/Exemptions Available To .

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A Guide on Tax Incentives/Exemptions available toInvestors in UgandaIncome Tax exemptionsWho qualifiesConditions for granting exemptionAircraft operators Must be licensed to operate as a Collective Investment Scheme. Extent to which the income is distributed to participants in the collectiveInvestment scheme. Participants in the scheme must not have day to day control over themanagement of the property in question Participants contributions and ultimate income/profits must be pooled Property must be managed as a whole by the operator of the scheme or on hisbehalf.For domestic and international traffic or leasing of the aircraftExporters of finishedconsumer and capitalgoodsApply to the Commissioner of Domestic Taxes to be issued with a certificate ofentitlement valid for 10 years tax holiday but must export at least 80% of his/herproduction of goods.Agro - ProcessorsApply to the commissioner for a certificate of exemption : Applicant or associate of applicant has not previously carried on agroprocessing of a similar or related agricultural product in Uganda and Applicant must invest in plant and machinery not previously been used inUganda by any person to process agricultural products for final consumption. Process agricultural products grown or produced in Uganda. Person regularly files return and fulfils all his tax obligations under the incometax act. met Certificate of exemption issued is valid for one year and may be renewedCollective Investmentscheme

Withholding TaxExemptionsVAT Exempt suppliesannually.a) A supply or importation of petroleum or petroleum products, including furnaceoil, other than cosmetics and fabrics or yarn manufactured out of petroleumRepealedproducts;b) A supply or importation of plant and machinery;c) A supply or importation of human or animal drugs;d) A supply or importation of scholastic materials for use only in educationalinstitutions;e) Importations by organizations within the definition of “exempt organization” insection 2(bb)(i)(B);f ) A supplier or importer – Who is exempt from tax under this Act; or Who the Commissioner is satisfied has regularly complied with the obligationsimposed on the supplier or importer under this Act; (Apply to the CommissionerDomestic Taxes for this exemption) org) The supply or importation of raw materials The supply of social welfare services; The supply of financial services The supply of education services The supply of burial and cremation services; The supply of betting, lotteries and games of chance The supply of passenger transportation services (other than Tour and Traveloperators) The supply of dental ,medical and veterinary goods and for the purposes of thisparagraph “goods”means: Dental, medical and veterinary equipment, ambulances, contraceptives ofall forms, maternity kits (mama kits), medical examination gloves, medicatedcotton wool, mosquito nets, acaricides, insecticides and mosquito repellentdevices, and diapers The supply of photosensitive semiconductor devices, including photo-voltaic

devices, whether or not assembled in modules or made into panels; lightemitting diodes; solar water heaters, solar refrigerators and solar cookers The supply of power generated by solar The supply of life jackets, lifesaving gear, head gear and speed governors The supply of machinery, tools and implements suitable for use only inagriculture and for purposes of this "machinery, tools and implements" means- (i)knapsack sprayers;(ii)ox ploughs ; (iii) drinkers and feeders for chicken; (iv)agricultural tractors(including walking tractors); (v) disk harrows; (vi)cultivators; (vii) ploughs; (viii) weeders; (ix) seeders; (x) planters; (xi) subsoilers; (xii) seed drills; (xiii) threshers; (xiv) bale wrappers; (xv) milkingmachinery; (xvi) milk coolers; (xvii) maize mills; (xviii) wheat flour mills; (xix)homogenizers; (xx) dairy machinery; (xxi) grain cleaners and sorters; (xxii) feedgrinders hatcheries; and (xxiii) implements used for artificial insemination inanimals" The supply of postage stamps The supply of unimproved land The supply of Life, medical, micro and re-insurance insurance services; The supply of unprocessed foodstuffs, unprocessed agricultural productsexcept wheat grain and livestock; The supply of veterinary, medical, dental and nursing services The supply of precious metals and other valuables to the Bank of Uganda forthe State Treasury The supply by way of sale, leasing or letting of immovable property, other than;(i) a sale, lease or letting of commercial premises;(ii) a sale, lease or letting for parking or storing cars or other vehicles;(iii) a sale, lease or letting of hotel or holiday accommodation;(iv) a sale, lease or letting for periods not exceeding three months; or(v) a sale, lease or letting of service apartments The supply of petroleum fuels subject to excise duty,(motor spirit, keroseneand gas oil), spirit type jet fuel, kerosene type jet fuel and residual oils for use

in thermal generation to the national grid.VAT Zero rated supplies(These are supplieswhere VAT is chargedat zero rate. i.e. 0%) A supply of goods or services where the goods or services are exported fromUganda as part of the supply; The supply of international transport of goods or passengers and tickets for theirtransport The supply of drugs and medicines The supply of seeds, fertilizers, pesticides, and hoes; (“pesticides” meansinsecticides, rodenticides Fungicides and herbicides but does not include pesticides packaged forpersonal or domestic use.) The supply of sanitary towels and tampons and inputs for their manufacture. The supply of educational materials The supply of leased aircraft, aircraft engines, spare engines, spare parts foraircraft and aircraft maintenance Equipment. Cereals grown and milled in Uganda.ReinstatedExemption of Tax on International PaymentsWho qualifiesConditions for granting exemptionA resident company paying Debentures were issued by the company outside Uganda for the purpose ofraising a loan outside Uganda.interest on debentures Debentures were widely issued for the purpose of raising funds for use by theoutside Uganda.company in a business carried on in UgandaDeductions AllowedType of incentiveTax deduction forWho qualifiesPrivate employers thatConditions for granting deduction2% of income tax payable is allowed as a deduction

employers of Persons withDisabilitiesScientific ResearchExpenditureemploy persons withdisabilitiesA person who incursexpenditure for scientificresearchA person who incursexpenditure for searching,discovering and winningaccess to the deposit ofminerals.Repealedfor income tax purposes if 5% of their employees onfull time basis are persons with disabilities.100% scientific research expenditureallowed as a deduction for income tax purposesTraining ExpenditureEmployers who trainpermanent residentsemployed100% training expenditure on training or tertiaryeducation allowed as a deduction for income taxpurposes.Industrial BuildingAllowanceA person who hasincurred capitalexpenditure on theconstruction of anindustrial building and thebuilding is used by theperson in the productionof incomeA person who placesdepreciable assets (listed )5% of the cost of construction of the industrialbuilding.Mineral ExplorationDepreciation allowances(Capital Investment100%. Deduction granted on any expenditure ofcapital nature incurred in searching, discovering andwinning access to deposits in Uganda;Declared annually by investor in the return onreducing balance method

Allowances)in serviceCarry Forward LossesAn investor who for anyyear of income, the totalamount of hisincome/farming income isexceeded by the totalamount of deductionsallowed 40% for computers and data handling equipment 35% for automobiles; buses and mini-buses( 30passengers); goods vehicles( 7 tones);construction & earth moving equipment 30% for buses ( 30 passengers); good vehicles ( 7 tones); specialized trucks; tractors; plant &machinery used in farming, manufacturing ormining operations; trailers & trailer-mountedcontainers. 20% for rail cars;, locomotives & equipment;vessels, barges, tugs & similar watertransportation equipment; aircraft; specializedpublic utility plant, equipment & machinery;office furniture, fixtures & equipment; anydepreciable asset not included elsewhere andfarm works.The amount of excess “assessed loss” or “assessedfarming loss” is carried forward and allowed as adeduction in the following year of income.Double Taxation AgreementsWho qualifiesDTAs in force and those pendingInvestors from countriesUnited kingdom, Zambia, Denmark, Norway, South Africa, India, Italy, Netherlandswith active DTA withand Mauritius. DTAs offer preferential rates of withholding tax on dividends,Uganda.interest, royalties and management fees. With exception of the United Kingdom

(UK), DTA where the rate of withholding tax is 15%, the withholding tax ratesapplicable to dividends, interests, royalties and management fees is 10%.DTAs awaiting conclusion and or ratification: Egypt, China, Belgium, UAE,Seychelles, and The East African CommunityExport Based IncentivesWho qualifiesType of incentive Duty Draw Back. ManufacturingUnder BondDuty RemissionSchemesConditions for granting exemption prove they have exported their products Customs refunds all or part of any import dutypaid on materials inputs imported to produce forexport or used in a manner or for a purposeprescribed as a condition for granting duty drawback. Duty may be refunded on raw materialsimported and used on the goods locallyproduced for export. Manufacturer must have licensed under sec. 160of the EACCM by applying for a customs licenseto hold and use imported raw materials intendedfor manufacture for export in secured placeswithout payment of taxes. It makes availableworking capital, which would have been tied upthrough paying duties immediately afterimportation. The annual license fee for a bondedfactory is 1,500 per calendar year or on pro ratabasis if issued within a calendar year. 90% remission on sugar for industrial use importedby Manufacturers. 100% remission on- Inputs for the manufacture of exercise books andother essential goods-Stranded wire used in manufacture of tyres

Export Processing inthe free zone.- Treads for cold retreading used in the retreading oftyres- Packaging Materials for use in the manufacture ofgoods for export- Raw materials for use in manufacture of aluminumcans for the dairy industry Uganda Free Zone Authority set up forpromoting exports in the free zone area (Kenya,Rwanda, Tanzania, Burundi and Uganda)increasing commodity processing from tradingraw materials to finished goods and exportingoutside East Africa as their primary activity. Manufacturing is strictly for export purposes.Import Based IncentivesEAC General Exemption Regime (imported into the country free of duty and all taxes)BeneficiaryGoods/ItemsConditionAircraft Operators and anAircrafts, parts andAircraft spare parts imported on therecommendation of the authorityapproved ground Handlers accessories, specializedresponsible for civil aviation in the Partner State andor caterer.equipment, apron buses.in such quantities as theCommissioner may specify.Aviation specialized goods and equipment;a) Aircraft, aircraft engines, parts and accessoriesthereof, air navigational instruments; lighting,radio and radar apparatus and equipment ofspecialized nature for the repair, maintenanceand servicing of an air- craft on the ground;ground signs, stairways for boarding aircraft,imported solely for use in connection withaircraft; catering stores, such as luncheon

boxes, cardboard trays, paper plates, papernapkins, imported for use by any airline.b)Any of the following goods, which are importedfor use by an approved ground handler or caterer:i) Equipment of a specialized nature for repairs;maintenance and servicing of an aircraft.(ii) specialized aircraft loading and unloadingequipment; and(iii) stairways for boarding and loading aircraftsiv) Apron buses which are essentially used inAirports.c) Aircraft spare parts imported by aircraft operatorsor persons engaged in the business of aircraftmaintenance:Provided that such spare parts shall be imported onthe recommendation of the authority responsible forcivil aviation in the Partner State and in suchquantities as the Commissioner may specify.Ships and Other VesselsPassenger and cargo vessels of all kinds of twenty five net register tonnage or more, cable ships,floating factories, whale catching vessels, trawlersand other commercial fishing vessels (other thansport fishing vessels), weather ships, hopperbarges; lighters, pontoons (being flat deckedvessels used for the transportation of persons orgoods) and ferry boats; parts and accessories, but

not including batteries and sparking plugs.ManufacturersPlant and machineryIndustrial spare partsContainers and PalletsImport duty is nil by tariff and VAT is deferred.Facility is granted to VAT registered personsWhere by payment of VAT at importation onspecified imports is postponed to a future date inaccordance with the VAT Deferment Regulations2013. The cost of plant and machinery should be atleast 22,500 and above.Industrial spare parts imported as replacement partsused exclusively on industrial machinery classified inChapters 84 and 85 of the EAC CET imported byregistered manufacturers and are not for resale orany other commercial purpose other than forreplacement of worn out and obsolete parts ofindustrial machines subject to such conditions as theCommissioner may impose.a) Containers, including boxes, tins, bottles,jars, and other packages in which any goodsnot liable to ad valorem duty are packed andimported, being ordinary trade packages for thegoods contained therein;(b) Pallets and pre-packing slings;(c) Containers specially designed and equippedfor carriage by one or more modes of er on the recommendation of theDirector of Veterinary Services is satisfied, and

specially designed for storing semen for artificialinsemination;(e) Packing material of any kind designed forpackaging goods for export.Hotel, Tourism and Touroperations.Hotel Equipment“Any of the following goods engraved or printed ormarked with the hotel logo imported by a licensedhotel for its use:(a) Washing machines;(b) Kitchen Ware;(c) Cookers;(d) Fridges and freezers(e) Air Conditioning Systems;(f) Cutlery;(g) Televisions;(h) Carpets;(i) Furniture;(j) Linen and Curtains;(k) Gymnasium equipment.MotorvehiclesTransport of Tourists:for Specially designed and built motor vehicles fortransportation of tourists imported by licensed touroperators upon recommendation by a competentauthority responsible for tourism promotion in aPartner State provided the vehicles meet thefollowing conditions:(a) they are four wheel drive with open rooffacility for game viewing and have a seating

capacity not exceeding 12 passengers;(b) they have provisions for camping, rescue andfirst aid equipment, baggage compartmentand communication fittings;(c) they are of a colour that blends with theenvironment where they operate and haveclear and conspicuous label or marking of “Tourist vehicle”;(d) any other conditions the Commissioner mayimposeProvided that duties shall be payable upon disposalfor other use or change of use.Other imported Specialized Dairy industrymotor(refrigerated trucks,vehiclesinsulated tankers andheat insulated milktanks) Refuse and garbagecollection industry(a) Refrigerated trucks(b) Insulated tankers(c) Heat insulated milk tanks for dairy industry(d) Motor vehicles specially designed for refuse/garbage collection and disposal imported orpurchased by local authorities or persons contractedby local authorities to collect refuse/ garbageHospitals, clinicsand diagnosticlaboratoriesAny of the following goods engraved or printed ormarked with the hospital logo imported for use inlicenced hospitals, as recommended by the Directorof Medical Services subject to such conditions andlimitations as the Commissioner may impose:Items imported for use inlicensed hospitals”(a) shadow less lamps foruse in operatingheatres(b) blood freezers(c) kitchenware andequipment

(d) laundry equipment(e) mattresses and linen(f) bedside screens(g) air conditioners(h) uniforms for use byhospital staff(i) water heatingequipments(j) trolleys and stretchersfurnitureDiagnostic reagents andequipment, examinationgloves, Diapers, Urine bagsand hygienic bags formedical use.Diagnostic reagents and equipment recommendedby the Director of Medical Services or the Director ofVeterinary Services for use in hospitals, clinics anddiagnostic laboratories subject to such limitations asthe Commissioner in a Partner State may impose.Examination GlovesExamination gloves for laboratory and medical usePackaging Material forMedicamentsDiagnostic Reagents andEquipment and Diapers,Urine bags and hygienicbagsPackaging materials and raw materials formanufacture of Medicaments.Diagnostic reagents and equipment recommendedby the Director of Medical Services or the Director ofVeterinary Services for use in hospitals, clinics anddiagnostic laboratories subject to such limitations asthe Commissioner in a Partner State may impose.Diapers, Urine bags and hygienic bags for medicaluse, in such quantities as the Commissioner mayallow.

Inputs for use in the Inputs for use in the manufacture of medicalmanufacture of medical diagnostic kits imported by manufacturersofdiagnostic kitsmedical diagnostic kits as approved by a competentauthority in the a Partner StateImporterEnergy sectorTsetse fly trapsWater Treatment EffluentPlant and Plastic bagbiogas digestersCompact FluorescentBulbs and SpecializedSolar equipment andaccessoriesElectrical Energy savingbulbs for lighting alsoknown as CompactFluorescent Bulbs”Specialized Solar andWind Energy EquipmentMINING AND PETROLEUMOPRATIONS.No conditionNo conditiona) Compact Fluorescent Bulbs (Energy Saving Bulbs)with Power connecting cap at one end.b) Lamps and bulbs made from Light Emitting Diodes(LED) technology for domestic and industrial use.c) Specialized Solar powered equipment andaccessories including deep cycle batteries which useand/ or store solar power.(a) Compact Fluorescent Bulbs ( Energy SavingBulbs) with power connecting cap at one end.(b) Lamps and bulbs made from Light EmittingDiodes (LED) technology for domestic and industrialuse.Specialized equipment for development andgeneration of Solar and Wind Energy, includingaccessories, spare parts and deep cycle batterieswhich use and/ or store solar powera) Equipment and inputs, but not including motorvehicles, imported by a licensed company for directand exclusive use in oil, gas or geothermalexploration and development upon recommendation

by a competent Authority of a Partner State.b) Spare parts for machinery used in miningimported by licensed mining companies.c) Carried forward losses from mining operations inthe license area is an allowable deduction.d) If the cost of acquiring a depreciable asset istreated asmining exploration expenditure the asset is treatedas belonging to a separate pool of depreciableassets; and the depreciation rate applicable to thepool is 100%.f) A contribution made by a licensee to arehabilitation fund in accordance with an approvedrehabilitation plan in relation to mining operationsshall be allowed as a deduction in the year of incomein which the contribution was made.g) An amount accumulated in a rehabilitation fund,or an amount withdrawn from a habilitation fund tomeet expenditure incurred under an approvedrehabilitation plan, shall be exempt income.h) Recovery of Costs incurred in for of cost oil, theseshould be approved costs according to workprogrammed are allowable deductions.i) No import duties payable by licensees (Oil and Gascompanies) for goods and equipment for exclusiveuse in oil and Gasj) Licensees (Oil and Gas) are entitled to VATregi

VAT Exempt supplies The supply of social welfare services; . Type of incentive Who qualifies Conditions for granting deduction Tax deduction for Private employers that 2% of income tax payable is allowed as a deduction . DTA where the rate of withholding tax is 15%, the withholding tax ra

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