Countries enter into Double Taxation Treaties (DTTs) or Agreements (DTAs) to facilitate investment and to create fiscal certainty

for
investors to inform location decisions. In theory, the purpose of DTTs is to eliminate double taxation of cross-border flows by
determining which treaty partner can tax different categories of income generated in one treaty state by a resident of the other.
DTT as are a commonly used basis by which any two countries can divide up taxing rights over income generated by companies and
persons who have a connection with both countries, on the basis of residence of the taxpayers or source of income. The DTTs are also
given effect in the domestic tax law but cannot create a right to tax, which does not already exist in the countrys domestic tax law
Concept of permanent establishment (PE)

The Ugandan Income Tax Act, Cap. 340 (ITA) does not define a PE, but defines a branch as a place where a person is:

carrying on business through an agent, other than a general agent of independent status acting in the ordinary course of
business as such;

using, or installing substantial equipment or machinery for at least 90 days; or

engaged in a construction, assembly, or installation project for at least 90 days, including a place where a person is conducting
supervisory activities in relation to such a project.

Tax treaty network and transfer pricing

Uganda has entered into double tax treaties with Denmark, India, Italy, Mauritius, the Netherlands, Norway, South Africa, United
Kingdom and Zambia.

With Holding Tax: A tax deducted at source, especially one levied by some countries on interest or dividends paid to a person resident
outside that country.

Withholding tax is deducted at source on specified payments both to residents and non-residents. Withholding tax is generally an
advance tax in the case of residents and a final tax in the case of non-residents.

Income Tax is charged upon all income of a person who has chargeable income for the year of income whether resident or non-resident,
which accrued in or was derived from Uganda. Residents have to pay tax on income derived from all geographical locations. An
individual is resident for tax purposes if he has a permanent home in Uganda for any period in particular year of income under
consideration or if he has no permanent home in Uganda but was present in Uganda for a period or periods amounting in the aggregate
to 183 days or more in that year of income or was present in Uganda in that year of income and in each of the two preceding years of
income for periods averaging more than 122 days in each year of income.

Foreign source income derived by a short term resident of Uganda is exempt form tax. A short term resident means a resident
individual, other than a citizen of Uganda, present in Uganda for a period or periods not exceeding two years.

A body of persons is resident for tax purposes if the body is a company incorporated under the laws of Uganda or the management and
control was exercised in Uganda at any time during the year of income or it undertakes the majority of its operations in Uganda during
the year of income.

Tax on the first shs 4,920,000 is Shs 546,000 (11.1%).

Non Residents
Annual Taxable Income Shs %

First shs 2,820,000 10

Next shs 2,100,000 20

Next shs 4,920,000 30

Tax on first shs 4,920,000 is Shs 702,000 (14.3%).
Taxable Benefits

Motor Vehicles: The taxable benefit is 20% of the market value of the motor vehicle when it was first provided to the employee.
For the purposes of determining the market value of the vehicle when first provided to the employee, the full purchase price
shall be depreciated at 35% per annum on a reducing balance method.

Housing: The value of the benefit is the lesser of:

(a) The market value; or
(b) 15% of the employment income, including the amount referred to in paragraph

Utilities and domestic assistance

The value of benefit is the total cost to the employer.
All other benefits provided by an employer to an employee are the market value of the benefit.
All allowances including housing, travelling etc. are taxable.