Income Tax Act 1997

Chapter number: 

340

In-force: 

Yes

 

CHAPTER 340

THE INCOME TAX ACT.

Arrangement of Sections.

Section

PART I—PRELIMINARY.

Application of the Act.

Interpretation.

Associate.

PART II—IMPOSITION OF TAX.

Income tax imposed.

Rental tax imposed.

Rates of tax.

Rates of tax for individuals.

Rate of income tax for companies.

Rate of income tax for trustees and retirement funds.

PART III—RESIDENTS AND NONRESIDENTS.

Resident individual.

Resident company.

Resident trust.

Resident partnership.

Resident retirement fund.

Nonresident person.

Chargeable income.

Chargeable income arising from insurance business.

PART IV—CHARGEABLE INCOME.

Gross income.

Gross income.

Business income.

Employment income.

Property income.

Exempt income.
21. Exempt income.

Deductions.

Expenses of deriving income.

Meal, refreshment and entertainment expenditure.

Bad debts.

Interest.

Repairs and minor capital equipment.

Depreciable assets.

Initial allowance.

Industrial buildings.

Start-up costs.

Costs of intangible assets.

Scientific research expenditure.

Training expenditure.

Charitable donations.

Farming.

Mineral exploration expenditures.

Apportionment of deductions.

Carry forward losses.

PART V—TAX ACCOUNTING PRINCIPLES.

Substituted year of income.

Method of accounting.

Cash-basis taxpayer.

Accrual-basis taxpayer.

Prepayments.

Claim of right.

Long-term contracts.

Trading stock.

Debt obligations with discount or premium.

Foreign currency debt gains and losses.

PART VI—GAINS AND LOSSES ON DISPOSAL OF ASSETS.

Application of Part VI.

Gains and losses on disposal of assets.

Disposals.

Cost base.

Special rules for consideration received.

Nonrecognition of gain or loss.

PART VII—MISCELLANEOUS RULES FOR DETERMINING CHARGEABLE

INCOME.

Income of joint owners.

Valuation.

Currency conversion.

Indirect payments and benefits.

Finance leases.

Exclusion of doctrine of mutuality.

Compensation receipts.

Recouped expenditure.

PART VIII —PERSONS ASSESSABLE. Taxation of individuals.

Taxation of individuals.

Income splitting.

Taxation of partnerships and partners.

Principles of taxation for partnerships.

Calculation of partnership income or loss.

Taxation of partners.

Formation, reconstitution or dissolution of a partnership.

Cost base of partner’s interest.

Taxation of trusts and beneficiaries.

Interpretation of provisions relating to taxation of trusts and beneficiaries.

Principles of taxation for trusts.

Taxation of trustees and beneficiaries.

Taxation of estates of deceased persons.

Taxation of companies and shareholders.

Principles of taxation for companies.

Change in control of companies.

Dividend stripping.

Rollover relief.

PART IX—INTERNATIONAL TAXATION.

Interpretation.

Source of income.

Foreign employment income.

Foreign tax credit.

Taxation of branch profits.

Tax on international payments.

Tax on payments to nonresident public entertainers or sports persons.

Tax on payments to nonresident contractors or professionals.

Taxation of nonresidents providing shipping, air transport or telecommunications services in Uganda.

General provisions relating to taxes imposed under sections 83, 84, 85 and 86.

International agreements.

Thin capitalisation.

PART X—ANTIAVOIDANCE.

Transactions between associates.

Recharacterisation of income and deductions.

PART XI —PROCEDURE RELATING TO INCOME TAX.

Returns.

Furnishing of return of income.

Cases where return of income not required.

Extension of time to furnish a return of income.

Assessments.

Assessments.

Self-assessment.

Additional assessments.

General provisions in relation to assessments.

Objections and appeals.

Objection to assessment.

Appeal to the High Court or a tax tribunal.

Appeal to the Court of Appeal.

Burden of proof.

Collection and recovery of tax.

Due date for payment of tax.

Tax as a debt due to the Government of Uganda.

Collection of tax from persons leaving Uganda permanently.

Recovery of tax from person owing money to the taxpayer.

Collection of tax by distraint.

Recovery from agent of nonresident.

Duties of receivers.

Security on property for unpaid tax.

Provisional tax.

Payment of provisional tax.

Estimated tax payable.

Refund of tax.
113.
Refunds.

PART XII —PROCEDURE RELATING TO GROSS RENTAL TAX.

Gross rental tax. PART XIII—WITHHOLDING OF TAX AT THE SOURCE.

Interpretation of Part XIII.

Withholding of tax by employers.

Payment of interest to resident persons.

Payment of dividends to resident shareholders.

Payment for goods and services.

International payments.

Nonresident services contract.

Withholding as a final tax.

Payment of tax withheld.

Failure to withhold tax.

Tax credit certificates.

Record of payments and tax withheld.

Priority of tax withheld.

Adjustment on assessment and withholding agent’s indemnity.

PART XIV—RECORDS AND INFORMATION COLLECTION.

Accounts and records.

Business information returns.

Access to books, records and computers.

Notice to obtain information or evidence.

Books and records not in the English language.

Tax clearance certificate.
134. Tax clearance certificate.

Tax identification number.
135. Tax identification number.

PART XV —OFFENCES AND PENALTIES.

Interest.
136. Interest on unpaid tax.

Offences and penalties.

Failure to furnish a return.

Failure to comply with recovery provision.

Failure to maintain proper records.

Failure to comply with a section132 notice.

Improper use of tax identification number.

Making false or misleading statements.

Obstructing an officer of the authority.

Aiding and abetting.

Offences by and relating to officers and persons employed to carry out this Act; penalties.

Offences by companies.

Officer may appear on behalf of the commissioner.

Compounding offences.

Place of trial.

Tax charged to be paid notwithstanding prosecution.

Penal tax.

Penal tax for failure to furnish a return of income.

Penal tax in relation to records.

Penal tax in relation to false or misleading statements.

Penal tax for understating provisional tax estimates.

Recovery of penal tax.

PART XVI—ADMINISTRATION.

Delegation.

Official secrecy.

Forms and notices.

158. 159.
Forms and notices; authentication of documents. Service of notices and other documents.

Rulings.

Practice notes.

Private rulings.

Remission of tax.
162. Remission of tax.

PART XVII—MISCELLANEOUS.

Interpretation of Part XVII.

Regulations.

Amendment of monetary amounts and Schedules.

Transitional.

Schedules

First Schedule Listed institutions.

Second Schedule Small business taxpayers tax rates.

Third Schedule Rates of tax.

Fourth Schedule Chargeable income arising from short-

term insurance business.

Fifth Schedule Valuation of benefits.

Sixth Schedule Depreciation rates and vehicle

depreciation ceiling.

Seventh Schedule Currency point.

CHAPTER 340

THE INCOME TAX ACT.

Commencement: 1 July, 1997.

An Act to consolidate and amend the law relating to income tax and for other connected purposes.

PART I—PRELIMINARY.

1. Application of the Act.
This Act applies to years of income commencing on or after 1st July, 1997.
2. Interpretation.

In this Act, unless the context otherwise requires—

“amateur sporting association” means an association whose sole or main object is to foster or control any athletic sport or game and whose members consist only of amateur sports persons or affiliated associations, the members of which consist only of amateur sports persons;

“approved” means approved by the Minister under regulations made under section 164;

“assessed loss” has the meaning in section 38;

“assessment” means— (i) the ascertainment of the chargeable income of, and the

amount of tax payable on it by, a taxpayer for a year of
income under this Act, including a deemed assessment

under section 96; (ii) the ascertainment of the rental income of, and the amount

of tax payable on it by, an individual for a year of income

under this Act; (iii) the ascertainment of the amount of penal tax payable by a

person under this Act; or (iv) any decision of the commissioner which, under this Act, is

subject to objection and appeal;

“ associate” has the meaning in section 3;

“building society” means a building society registered under the
Building Societies Act; (g) “business” includes any trade, profession, vocation or adventure
in the nature of trade, but does not include employment; (h) “business asset” means an asset which is used or held ready for

use in a business, and includes any asset held for sale in a
business and any asset of a partnership or company; (i) “business debt” means—

(i) in the case of a debtor—

a debt obligation, the proceeds of which are used to acquire a business asset or to incur an expense of a business;

a debt obligation arising, as a result of being given time to pay, on the acquisition of a business asset or the incurring of an expense of a business; or

(C) any debt obligation of a partnership or company; or
(ii) in the case of a creditor, any debt obligation owed to the
creditor that was entered into or arose in the course of the creditor’s business; (j) “business income” has the meaning in section 18; (k) “chargeable income” has the meaning in section 15; (l) “chargeable trust income” has the meaning in section 70; (m) “commissioner” means the Commissioner General appointed
under the Uganda Revenue Authority Act; (n) “company” means a body of persons corporate or unincorporate,

whether created or recognised under the law in force in Uganda

or elsewhere, and a unit trust, but does not include any other trust
or a partnership; (o) “cost base”, in relation to an asset, has the meaning in section 52; (p) “court” means a court of competent jurisdiction; (q) “currency point” represents the amount in Uganda shillings
prescribed in the Seventh Schedule; (r) “debenture” includes any debenture stock, mortgage, mortgage

stock, loan, loan stock or any similar instrument acknowledging
indebtedness, whether secured or unsecured; (s) “debt obligation” means an obligation to make a repayment of

money to another person, including accounts payable and the

obligations arising under promissory notes, bills of exchange and
bonds; (t) “dependent”, in relation to a member of a retirement fund, means

a spouse of the member, any child, including an adopted child, of

the member who is under the age of eighteen years or any other

relative of the member who the commissioner is satisfied relies
on the member for support; (u) “depreciable asset” means any plant or machinery, or any

implement, utensil or similar article, which is wholly or partly

used, or held ready for use, by a person in the production of

income included in gross income and which is likely to lose value
because of wear and tear, or obsolescence; (v) “disposal” has the meaning in section 51; (w) “dividend” includes—

(i) where a company issues debentures or redeemable preference shares to a shareholder—

in respect of which the shareholder gave no consideration, an amount equal to the greater of the nominal or redeemable value of the debentures or shares; or

in respect of which the shareholder gave consideration which is less than the greater of the nominal or redeemable value, an amount equal to the excess;

(ii) any distribution upon redemption or cancellation of a share, or made in the course of liquidation, in excess of the nominal value of the share redeemed, cancelled or subject to liquidation;

(iii) in the case of a partial return of capital, any payment made in excess of the amount by which the nominal value of the shares was reduced;

(iv) in the case of a reconstruction of a company, any payment made in respect of the shares in the company in excess of the nominal value of the shares before the reconstruction; or

(v) the amount of any loan, the amount of any payment for an asset or services, the value of any asset or services provided, or the amount of any debt obligation released, by a company to, or in favour of, a shareholder of the company or an associate of a shareholder to the extent to which the transaction is, in substance, a distribution of profits,
but does not include a distribution made by a building society; (x) “employee” means an individual engaged in employment; (y) “employer” means a person who employs or remunerates an
employee; (z) “employment” means—

(i) the position of an individual in the employment of another person;

(ii) a directorship of a company;

(iii) a position entitling the holder to a fixed or ascertainable remuneration; or
(iv) the holding or acting in any public office; (aa) “employment income” has the meaning in section 19; (bb) “exempt