ACTS

SUPPLEMENT No. 11                                                                          21st October, 2011.

ACTS SUPPLEMENT

to The Uganda Gazette No. 63 Volume CIV dated 21st October, 2011.

Printed by UPPC, Entebbe, by Order of the Government.

Act 21                     Income Tax (Amendment) Act                        2011

THE INCOME TAX (AMENDMENT) ACT, 2011

ARRANGEMENT OF SECTIONS

Sections

1.

Commencement

2.

Amendment

of section

2

3.

Amendment

of section

4

4.

Amendment

of section

19

5.

Amendment

of section

21

6.

Amendment

of section

78

7.

Amendment

of section

79

8.

Amendment

of section

86

9.

Amendment

of section

88

10.

Amendment

of section

89QC

11.

Amendment

of section

121

12.

Amendment

of section

135

13.

Amendment

of section

140

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Act 21

Income Tax (Amendment) Act

2011

THE INCOME TAX (AMENDMENT) ACT, 2011

An Act to amend the Income Tax Act Cap. 340 to provide for exclusion from employment income the value of a right or option to acquire shares granted to an employee under an employee share acquisition scheme; income derived from agro processing; and other related matters.

Date of Assent: 29th September, 2011.

Date of Commencement: 1st July, 2011.

Be it enacted by Parliament as follows:

1. Commencement

This Act shall come into force on 1st July, 2011.

2. Amendment of section 2

Section 2 of the Income Tax Act in this Act referred to as the principal Act is amended in subparagraph (nnn) (i) (C) by inserting immediately after the word “television” the word “internet”.

3. Amendment of section 4

Section 4 of the principal Act is amended—

1. in subsection (4), by inserting immediately before the word “Where” the words “Subject to subsection (6a)”; and
2. by inserting immediately after subsection (6) the following—

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Act 21                     Income Tax (Amendment) Act                        2011

“(6a) subsection (4) shall not apply to a taxpayer for a tax year if the employment income of that taxpayer for that year includes an amount under section 19(1)(h).”

4. Amendment of section 19

Section 19 of the principal Act is amended by inserting immediately after subsection (2)(g) the following—

“(h) the value of a right or option to acquire shares granted to an employee under an employee share acquisition scheme;”

5. Amendment of section 21

Section 21 of the principal Act is amended by substituting for subsection (1)(z) the following—

“(z) the income of a person for a year of income derived from agro-processing where—

1. the person or an associate of the person has not previously carried on agro-processing of a similar or related agricultural product in Uganda
2. upon commencement of agro-processing in Uganda, the person applies in writing to the Commissioner for a certificate of exemption which the Commissioner may issue within sixty days of receiving the application;
3. the person invests in plant and machinery that has not previously been used in Uganda by any person in agro-processing to process agricultural products for final consumption;
4. the person processes agricultural products grown or produced in Uganda;

5. the person regularly files returns as required under this Act;

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Act 21                     Income Tax (Amendment) Act                               2011

6. the person regularly fulfils all obligations under this Act relating to that person’s investment; and
7. the person has been issued with a certificate of exemption for that year of income by the Commissioner.

(za) For avoidance of doubt, a certificate of exemption issued

under subsection (1) (z) (ii) shall be valid for one year and

may be renewed annually.”

6. Amendment of section 78

Section 78 of the principal Act is amended in sub-paragraph (a)(ii), by inserting immediately after the word “machinery” the words “for ninety days or more”.

7. Amendment of section 79

Section 79 of the principal Act is amended by substituting for paragraph (j) the following—

“(j) a royalty—

1. paid by a resident person, other than as an expenditure of a business carried on by the person outside Uganda through a branch;
2. paid by non-resident person as an expenditure of a business carried on by the person through a branch in Uganda; or
3. arising from the disposal of industrial or intellectual property used in Uganda.”

8. Amendment of section 86

Section 86 is amended by substituting for subsection (4) the following—

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Act 21                     Income Tax (Amendment) Act                        2011

“(4) Where a non-resident person carries on the business of transmitting messages by cable, radio, optical fibre, or satellite communication, or the business of providing internet connectivity services, the tax payable by the person shall be five per cent of the gross amount derived by the person in respect of—

1. the transmission of messages by apparatus established in Uganda;
2. the provision of direct-to-home pay services to subscribers in Uganda; or
3. the provision of internet connectivity services to subscribers in Uganda.”

9. Amendment of section 88

Section 88(5) of the principal Act is amended by substituting for “is subject to a reduction in the rate of” the words “the application of the treaty results in a reduction in”.

10. Amendment of section 89QC

Section 89QC of the principal Act is amended in subsection (1)(a) by substituting for “section 54” the words “section 154”.

11. Amendment of section 121

Section 121 of the Principal Act is amended—

1. in subsection (3) by substituting for “this section” the words “subsection (2)”; and
2. by inserting immediately after subsection (3) the following—

“(4) A person who fails to notify the Commissioner in accordance with subsection (1) is personally liable to pay to the Commissioner the amount of tax that the non­resident is liable for on the income arising under the contract, but the person is entitled to recover this amount from the non-resident.

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