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URA issues deadline for Withholding Tax Exemption applicants
The Uganda Revenue Authority (URA) Tower that houses the tax body’s headquarters in Kampala. FILE/PHOTO
The Uganda Revenue Authority (URA) has issued a reminder to taxpayers who applied for Withholding Tax Exemption for the FY 2023/24 that they should fulfil their tax returns before the end of the 2022/23 Financial Year on June 30.
In their announcement, URA remarked that taxpayers who seek this exemption must have green lights on the four parameters indicated in a public notice before the said date or else their applications will not be considered.
All pending returns for all directors or partners are to be submitted by June 30, 2023 while the same date is applicable to all due tax payments, going by the notice.
The same notice indicates that payment due from other returns in the month of June should be fully paid by June 30 and any other outstanding tax liability should be fully paid on the same day or one must have an installment payment agreement approved by URA and a duly executed memorandum of understanding is in place.
Background
In a public notice issued on April 20, 2023, URA called for online applications from taxpayers who wished to be exempted from withholding tax exemption for the period between July 1, 2023 to June 30, 2024 in accordance with sections 118A(2) and 119(5)(f)(ii) of the Income Tax Act.
About the Withholding Tax
According to URA spokesperson Ibrahim Bbossa, Withholding tax (WHT) is a form of income tax that is withheld at a source by one person (withholding agent) upon making payment to another person (payee).
This tax is deducted at source and remitted to URA in advance by the withholding agent.
“This type of tax was introduced to increase the tax bracket and the law stipulates the persons who are required to withhold the tax and the persons from whom the tax is withheld. This depends on the nature and the circumstances of the transaction,” URA explained.
According to Bbossa, WHT is a way of persuading the non-compliant companies to meet their obligation of filing their tax returns in time.
He adds that: “Withheld taxes are credit to you. A withholding agent who fails to withhold tax is personally liable to pay to the commissioner- the amount of tax which has not been withheld and or remitted to URA. The agent, however, is entitled to recover the amount from the payee thereafter.”
