Transfer pricing in Uganda

Transfer pricing in Uganda at a glance

Regulation Type National regulations based on OECD Guidelines
Are there specific transfer pricing regulations? Yes
Submission deadline N/A
Submission deadline upon request N/A
Annual update required Yes
Official language requirements English
Potential impact of penalties 20% penalty on the shortfall

 

Ugandan tax law

Rules for transfer pricing in Uganda are based upon:

  • Income Tax (transfer pricing) regulations 2011
  • Income Tax Act, Cap. 240, Sections 90 and 164
  • Transfer Pricing Practice Note 2012

OECD

Uganda is not an OECD Member but it recognizes the OECD Transfer Pricing Guidelines.

Methods

Accepted methods

Accepted methods are:

  • the comparable uncontrolled price method
  • the resale price method
  • the cost plus method
  • the profit split method
  • the transactional net margin method

Priority of methods

Rules for transfer pricing in Uganda prescribe that a taxpayers should use the most appropriate method.

Documentation requirements

Information that should be included in the documentation:

  • The group organization structure of the entity
  • The details of the transaction under consideration
  • The transfer pricing method including the reasons for its selection
  • The assumptions, strategies and policies applied in selecting the method
  • The application of the method, the calculations made and price adjustment factors considered
  • The transfer pricing policy agreement
  • Such other background information as may be necessary

Language

Rules for transfer pricing in Uganda prescribe that all documentation should be submitted in English.

Requirements to prepare documentation annually

Transfer pricing documentation in Uganda should be submitted together with the income tax return, which is annual.

Submission deadline upon request by tax authorities

Not applicable.

Advance Pricing Agreements

General

Transfer pricing regulations provide for the opportunity to obtain unilateral and bilateral Advance Pricing Agreements (APA).

Terms

As described above, It is possible to obtain APA’s but the regulations do not provide for specific details about the process of getting APA’s.

Penalties

Failing to comply with the transfer pricing documentation requirements in Uganda could result in imprisonment or in a monetary fine. In the event an adjustment is raised by the tax authorities, a 20% penalty on the shortfall will be imposed where the provisional tax paid is less than 90% of the actual tax liability. The penalty on late payment is 2% per month on the shortfall and 2% of the gross tax liability for the year when the return is filled in late.

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