Transfer pricing in Uganda at a glance
|Regulation Type||National regulations based on OECD Guidelines|
|Are there specific transfer pricing regulations?||Yes|
|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
Uganda is not an OECD Member but it recognizes the OECD Transfer Pricing Guidelines.
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.
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
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
Advance Pricing Agreements
Transfer pricing regulations provide for the opportunity to obtain unilateral and bilateral Advance Pricing Agreements (APA).
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.
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.