Ugandan companies paying foreign service providers: withholding tax and VAT on imported services

A Kampala telecom services company pays a Nairobi consultancy UGX 74 million for a network study. Its accountant withholds 15 percent on the fee as a payment to a non-resident, unless a treaty changes it, and accounts for VAT on the imported service under the reverse charge. Both go to the Uganda Revenue Authority by the 15th of next month.

Withholding on non-residents

Uganda's Income Tax Act requires withholding, generally at 15 percent, on many payments from Ugandan sources to non-residents, including:

• management and professional fees,
• royalties,
• dividends and interest.

The payer withholds and remits the tax. Failure makes the payer liable.

VAT on imported services

When a Ugandan company receives services from a non-resident, it generally accounts for VAT on the imported service under the reverse charge. Registered companies can usually recover it as input tax if they use the service for taxable supplies.

Treaties

Uganda has a limited network of tax treaties, including some regional ones. Where a treaty applies, the rate may fall. Keep the provider's certificate of tax residence.

Deadlines

Withholding and VAT on imported services are generally due by the 15th of the month after payment.

Gross or net

Foreign providers often quote net. If you gross up, the 15 percent is on top. Agree it in the contract.

Where Rivet fits

Rivet does not file Ugandan taxes. A Rivet business account accepts registered companies after verification, including Ugandan companies, and pays providers in 120+ countries with each payment matched to its invoice. Rivet is not a bank; regulated partner institutions hold the funds.