Tax compliance can be a challenging undertaking from the perspective of SME business owners, but it is an important business decision. The starting point is registering for a Tax Identification Number (TIN) with Uganda Revenue Authority (URA) and, after acquiring one, understanding the taxes applicable to your business. The different taxes include Pay As You Earn (PAYE), Income Tax, Value Added Tax (VAT), Withholding Tax, and Import Duty for businesses that import goods to the country. While electronic filing applies for all tax returns, recently URA introduced e-invoicing via the Electronic Fiscal Receipting and Invoicing System (EFRIS) – this required VAT-registered businesses to be on-boarded to the system by 1 January 2021.  Filing and paying of taxes have strict deadlines and failure to adhere may result in fines and penalties to the business. SMEs can avoid unnecessary penalties by being tax compliant if they follow these tips:

  • Conduct proper record keeping: This is critical for every SME because it allows you to have a comprehensive view of your business performance and conduct a clear self-assessment for required taxes. Business records can be maintained either in manual or digital formats.
  • Adhere to due dates: Due dates for submission of returns and payment of taxes are based upon Uganda’s financial year, which spans from 1st July to 30th Businesses are required to file PAYE returns every 15th day of the month and file annual income tax returns by 31st December every year.
  • Declare and pay the correct amount of tax: Declaring the incorrect amount of tax may result in you overpaying – (high tax liability) in turn reducing your business income. Sometimes you may end up underpaying taxes (tax leakage), which is a loss of revenue to the Government.
  • Seek the advice of a tax professional: SME owners sometimes do not know about the tax requirements and need a tax professional to advise on these issues so that your business is are tax compliant at all times. You can also get advice directly from URA at no charge at or look out for URA awareness seminars and trainings.

Following the above tips can result in better-informed decision making because the business operations are clear and up to date, reduced time required by auditors in the case of business audits, and increased revenue because extra costs and penalties are avoided. Importantly tax compliance can be a requirement to access business opportunities.

Always remember to follow up quickly should you receive a notice from URA about tax liability. If there are any challenges, there are procedures and measures available such as appealing to the Tax Tribunal. It may also help to hire a tax professional who can engage with URA on your behalf.

For more information on tax related issues visit: www.ura.go.ug or the URA offices in your location.

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