COVID-19: Uganda Revenue Authority grants various amnesties and extensions for filing key corporate taxes and payment of penalties

In the announcement made today, March 24^th, 2020 taxpayers whose accounting date is in September and were due to file their Corporation Tax returns by 31st March 2020 but are unable to, have been granted a two (2) months reprieve. The new date for filing is May 31^st, 2020. All penalties related to late submission of these returns shall be canceled if the returns are filed on or before 31st May 2020.

In the same breath, URA has announced that taxpayers who were due to file their Value Added Tax (VAT), Pay As You Earn (PAYE), Local Excise Duty, Withholding Tax and all other taxes under the Lotteries and Gaming Act for March 2020, which fall due by the 15th of April 2020, but shall be unable to file, they shall be granted 15 more days to file on 30th April, 2020.

For those who failed to file their February 2020 returns by 15th March 2020 and are therefore liable to late payment penalties, these penalties shall be waived, provided they file their February returns by 31st March 2020.

To further ease taxpayer cash flows, the tax authority has said that taxpayers who had ongoing arrangements with URA and were due to make installments in the months of March and April 2020 but are unable to, have an option to defer and reschedule these payments to May 2020. This provision however only applies to taxpayers whose businesses have been affected by Government Directives on COVID-19 and are thus unable to meet their obligations during this period.  These include sectors like airlines, transport companies, and hotels who have been affected by massive travel restrictions globally and locally.

URA has however emphasized that these are not waivers or write-off as the outstanding taxes will still be paid in full in accordance with the provisions of the law.

In other concessions announced today, taxpayers who make any voluntary disclosures during the months of March and April 2020 and go ahead to pay the principal tax therein, shall have their penalty and interest waived in accordance with the law.

Government in a Catch 22

The government itself is in a catch 22 situation- it is faced with a projected revenue shortfall of between UGX 82.4 billion and UGX288.3 billion for the remaining period of the FY2019/20 and another shortfall of between UGX187.6 billion and UGX350 billion in FY2020/21. As a result, the finance ministry predicts, that the government will be hit by a preliminary additional financing gap of approximately UGX370 billion in FY2019/20 and UGX350 billion in FY 2020/21), yet the private sector is clamoring for massive tax concessions and monetary stimulus packages.

For example, tourism industry players, last week met with the finance minister and asked for a 12 months VAT relief for a minimum 12 months, deferral of advanced corporate tax payment for 2019 till the end of 2020 instead of mid financial year to allow the industry to use that cash flow to pay operating expenses. They also asked for a waiver of Pay As You Earn for a minimum of 12 months, saying this would allow them to keep thousands of jobs during the tough time and recovery phase.

Although these tax concessions may not satisfy all of their demands yet, it is a welcome relief as the country anxiously waits for the full-scale impact of COVID-19.

Limited physical contact

URA has also reiterated that during this time, all customs border stations shall remain open to facilitate the movement of cargo subject to the customs laws and guidelines and that all customs warehouses will remain functional to allow clearance of cargo subject to the customs guidelines.

The tax authority has also said that although they remain available to offer services that cannot be accessed online, they encouraged taxpayers to use more of their online services.

“Taxpayers are encouraged to submit any physical documents using our electronic channels. For payments: URA advises the public to use the following payment options; Online banking/ EFT/ RTGS, agency banking, VISA/MasterCard for Stanbic Bank, ABSA and UBA,  PayWay services across the country and Mobile money (MTN and Airtel),” said a statement released this afternoon.

Have you missed a tax payment deadline or worried you may not meet the next filing or penalty payment deadline? Please crosscheck with URA to see if you qualify for any of the cash-flow easing measures announced by the tax authority today.