Our focus on business compliance this past month has provided business owners with a roadmap to become and remain fully compliant. While compliance is often seen as meaning businesses see greater tax, registration and administrative obligations, the benefits from otherwise unavailable funding, partnership, and growth opportunities make these obligations worthwhile. Compliant businesses are more likely to access credit and investment capital, develop their operations more quickly, and benefit from partnerships with larger companies looking for downstream suppliers. To wrap up our series, we’ve rounded up the key lessons from interviews with experts and practitioners that discussed the ins and outs of business compliance. 

Business Registration 

Business registration is the process of formalizing your business – it starts with the Uganda Registration Services Bureau (URSB) and is the first step in business compliance. Business owners must decide whether they will register as a sole proprietorship – a business consisting of a single person – or as a company – a business with multiple members that may protect owners from the company’s legal liabilities. A sole proprietorship typically requires submission of an online form as well as payment of a one-time 24,000 UGX registration fee. Companies require greater administrative paperwork and must pay an incorporation fee based on the starting capital used for the business. They must also submit annual returns forms.  

Tax Compliance 

Tax compliance refers to the fulfillment of a business’ tax obligations as outlined by the Uganda Revenue Authority (URA). Tax-compliant businesses need to register for a free, ten-digit Taxpayer Identification Number (TIN) that allows them to fulfill their tax obligations. The TIN also allows businesses to obtain operating licenses necessary to work in a given industry. After obtaining their TIN, businesses file annual tax returns and pay any owed taxes.  Business owners can opt to pay their tax obligations annually, bi-annually, quarterly, or even monthly. While businesses can seek advice from a tax consultant, there are many URA resources available to businesses that can help guide them through their tax compliance journey. 

Human Resource Compliance 

Human Resource (HR) compliance specifically addresses the health and safety of a business’ staff while mitigating risks and hazards to health in the workplace. Businesses not prioritizing HR compliance may face serious consequences from officials such as closures or imprisonment if a staff member is harmed in the course of their job. To ensure compliance, businesses are encouraged to research requirements for their particular industry and designate someone within their organization to monitor compliance practices. Usually, these compliance guidelines can be obtained from regulatory bodies such as the Federation of Uganda Employers (FUE) or local licensing bodies such as the Kampala Capital City Authority (KCCA). 

Third-Party Compliance 

Third-party compliance deals with agreements in third-party contracts to ensure that the parties involved adhere to its rules, or in the event that they do not, are held liable. To start, businesses should be formally registered to ensure that all parties are governed by the rules and regulations applicable within their particular industry. Businesses entering into a third-party contract should be on the lookout for potential risks such as inflexibility in contracts, which may not take into account unexpected business interruptions, or unsuitable contract conditions transposed from other contexts such as copying western-styled contracts which do not account for the nuances of the Ugandan business environment. To limit risk in third-party contracts, businesses should carefully review contract terms of reference, payment structures, timelines, and arbitration methods. 

Investment Compliance 

Investment compliance addresses businesses’ need for investment to grow and expand operations. Larger companies and partners looking to invest in smaller businesses generally seek companies brandishing a risk-mitigation strategy. This usually begins with basic business compliance steps such as registering their business, obtaining a TIN, and having the appropriate licenses to operate within their industry sector. To help businesses better understand investment compliance obligations, the Uganda Investment Authority (UIA) provides resources such as their One-Stop Center which places all the regulatory agencies and authorities under a single roof.  

In closing, businesses seeking new growth, investment, and partnership opportunities should determine what compliance areas need attention and address those needs. For a better understanding of the individual compliance areas, readers should visit our corresponding articles for an in-depth read. Stay tuned for our next series to help navigate Uganda’s intricate business environment.