In this overview we shall highlight some of the changes brought by these amendments.

A: The Income Tax (Amendment) Act 2021 (2021 ITA)
Narrowing definition of a beneficial owner for double tax agreement purposes:
A beneficial owner is defined to mean a natural person who has final ownership or control of another person or a natural person on whose behalf a transaction is conducted, and includes a natural person who exercises absolute control over a legal person.

Providing a definition of an exempt organization: 
An exempt organization is defined to include any company, institution or irrecoverable trust which is a religious, charitable or educational institution whose object is not for profit. 

Remove of Agro processing exemption: 
The exemption previously enjoyed by a person earning income derived from agro-processing has been removed.
Increased deductions and rate of tax for purposes of rental income of individuals:
An individual conducting rental business is allowed a deduction up to 75% of the rental income as expenditure and losses incurred by a person in the production of such income. Previously an individual was allowed to deduct only 20%. The rental income of an individual will be taxed at rate of 30% of the chargeable income. 

New classification of depreciable assets:
Depreciable assets are now classified into three classes instead of the previous four. Class one includes computers and data handling (at a depreciation rate of 40%); class two includes plant and machinery used in farming, manufacturing and mining (at a depreciation rate of 30%); and class three includes automobiles; buses, minibuses, goods vehicles, construction and earth moving equipment, specialized trucks, tractors, trailers and trailer mounted containers, rail cars, locomotives and equipment; vessels, barges, tugs and similar water transportation equipment; aircraft; specialized public utility plant, equipment and machinery; office furniture, fixtures and equipment; any depreciable asset not included in another class (at a depreciation rate of 20%).

A deduction for the depreciation of an asset that qualifies for initial allowance shall be deferred to the next year of income. The deferral also applies to an industrial building that qualifies for initial allowance.
 
Gains from sale of interest in venture capital funds not charged to Capital Gains Tax:
No gain or loss is taken into account in determining chargeable income in relation to capital gains arising from the sale of investment interest of a registered venture capital fund if at least fifty percent of the proceeds on sale is reinvested within the year. A registered venture capital fund shall be entitled to a non-recognition of a gain or loss equivalent to the percentage of reinvested proceeds.

Minister to make Regulations to facilitate automatic exchange of information:
The Minister is mandated to make regulations to enable the commissioner facilitate automatic exchange of information under the international tax agreement providing for automatic exchange of information.
B: The Value added Tax (Amendment) Act 2021 (2021 VATA)
Clarification of the exemption of import of service: 
An import of a service is an exempt import if the service would be exempt had it been supplied in Uganda or would be used in the provision of an exempt supply. continue reading