URA wavies interest for struggling businesses.

In line to easing financial pressure on businesses still recovering from the effects of the COVID-19 pandemic, the Uganda Revenue Authority (URA) has introduced a new tax amnesty.

This initiative will waive interest and penalties on outstanding taxes as of June 30, 2023, for businesses that settle their principal tax obligations by December 31, 2024. The amnesty is designed to encourage tax compliance while providing relief to businesses struggling to recover from the pandemic's economic fallout.

The waiver applies to a range of domestic taxes, including income tax, value-added tax (VAT), excise duty, lotteries and gaming taxes, and stamp duty. Notably, it does not extend to customs duties, focusing instead on alleviating domestic tax burdens.

This is not the first time the Ugandan government has offered such relief. The initial amnesty, granted in 2020, was implemented as part of a broader effort to mitigate the impact of the nationwide lockdown and other pandemic-related disruptions.

That waiver targeted interest and penalties on taxes outstanding as of June 30, 2020, giving businesses a lifeline as they navigated an unprecedented economic crisis.

However, many businesses, still reeling from the pandemic’s long-term effects, struggled to fully benefit from the amnesty.

In 2023, a second amnesty was introduced, covering interest and penalties on taxes outstanding as of June 30, 2023, with a deadline for payment set for December 31, 2023.

Despite the opportunity, a significant number of businesses were unable to meet the payment deadline, largely due to continued financial strain.

Recognising these challenges and in response to requests from the business community, the Ugandan government extended the payment period for the amnesty to December 31, 2024.

This extension offers businesses additional time to settle their outstanding tax obligations and avoid the financial burden of accumulated interest and penalties.

According to Sarah Chelangat, URA’s Commissioner of Domestic Taxes, the amnesty is open to all taxpayers with outstanding principal tax balances as of June 30, 2023.

“If a taxpayer settles their outstanding principal tax in full by December 31, 2024, URA will automatically waive all interest and penalties accrued on that tax as of June 30, 2023,” Chelangat explained.

For taxpayers who can only make partial payments by the deadline, URA will proportionately waive the corresponding interest and penalties. However, Chelangat emphasized that any interest accrued after June 30, 2023, is not covered by the waiver, urging taxpayers to act swiftly to prevent further accumulation of interest.

“The sooner the outstanding tax is paid, the lower the risk of incurring additional interest,” she advised.

To ensure that businesses can fully benefit from the amnesty, URA is encouraging taxpayers to regularly check their tax balances.

By logging into their Tax Identification Number (TIN) accounts on the URA web portal, taxpayers can easily review their tax ledgers and confirm any outstanding amounts.

Should there be discrepancies, URA is offering support through local tax offices to reconcile accounts, ensuring that businesses can settle their principal tax obligations in time to qualify for the waiver.

Chelangat also stressed the importance of adhering to the December 31, 2024, deadline. Taxpayers who miss the deadline, even by a day, will not be eligible for the amnesty. “Any payments made after December 31, 2024, for instance in January 2025, will not benefit from the waiver,” she cautioned.

The extension of the amnesty reflects the government’s commitment to supporting businesses through their recovery phase, while also emphasising the need for timely tax compliance.

By waiving interest and penalties on unpaid taxes, URA aims to create a more favorable environment for businesses to clear their tax obligations without the burden of excessive financial penalties.