Provisional Income tax returns

A licensee who derives or expects to derive any income (petroleum revenues) during
a year of income is liable or subject to pay provisional tax (revenues) and file a
consolidated petroleum revenue return (tax return) incorporating other taxes payable
to the Government not included in petroleum revenues. Any overpaid provisional tax
may be refunded to the licensee.

Returns

Tax provisions on cases where tax returns or no  tax returns are required to be filed
and the extensions of time to file returns apply to a licensee with the following
modifications:

 a licensee shall file a return not later than seven (7) days after the end of every month
in respect of the provisional payments.
 a licensee shall, in each calendar quarter, make a provisional payment consisting of (i)
in the case of income tax, one quarter of the licensee’s estimated income tax for the
year; and (ii) in the case of petroleum revenues other than income tax, the amounts
payable for the quarter under the petroleum agreement.
 not less than 30 days before the beginning of a year of income, a contractor shall
furnish a return, including particulars for each calendar quarter of the year, estimated
to the best of the contractor’s judgement, and shall furnish updates of the return
within 7 days after the end of each of the first three calendar quarters in the year.
 the Commissioner may require a duly appointed agent or trustee of the licensee,
whether taxable or not, to furnish a return on the licensee’s behalf or as an agent or
trustee of the licensee.
 in addition to a return furnished on a licensee’s own behalf, the Commissioner may
require a licensee acting as an operator in a contract area, to furnish a return in respect
of that area on behalf of all licensee’s with an interest in the petroleum agreement.
 a return required shall include particulars of petroleum revenues and other taxes
prescribed by the Commissioner.
  a return required for any period shall be furnished, whether petroleum revenues or
other taxes are payable for the period or not.
 the Commissioner may make provision permitting or requiring a licensee to submit
returns electronically.
 In addition to a monthly return, a contractor shall file an annual consolidated
petroleum revenue return with the Commissioner at the end of each year of income,
not later than ninety days after the expiry of the year of income

Assessments, Objections and Appeal

 An assessment made by the Commissioner on a licensee may relate to petroleum

revenues and not only to chargeable income.
 Objections and appeals relating to petroleum revenues shall be determined in
following the objections and appeals procedure.

Collection and Recovery

The following modifications to tax collection and recovery procedure shall apply to
licensees with:

 petroleum revenues and other taxes charged in any assessment shall be payable within
7 days after the due date for furnishing a return.
 a licensee shall, in each calendar quarter, make a provisional payment consisting of –
(i) in the case of income tax, one quarter of the licensee’s estimated income tax for the
year; and (ii) in the case of petroleum revenues other than income tax, the amounts
payable for the quarter under the petroleum agreement.
 unless otherwise agreed between the GoU and a prescribed licensee, all payments or
refunds of petroleum revenues other than those payable in kind and other taxes shall
be made in USD.
 petroleum revenues shall be payable to the Uganda Revenue Authority (URA).
 License may apply for a refund of any petroleum revenues and other taxes payable to
the GoU, in respect of any year of income, of any tax paid by withholding,
instalments, or otherwise in excess of the liability assessed to or due by the licensee
for that year.
 late payment, or refunds of petroleum revenues and other taxes payable to the GoU
shall, for each day on which the sums are overdue during any month, bear interest
compounded daily at an annual rate equal to the average rates published by BoU plus
five percentage points;
 where a licensee has paid petroleum revenues in kind and the amount payable
subsequently requires to be adjusted for any reason, the adjustment will be made in
cash unless otherwise agreed between the GoU and a licensee;
 a payment of petroleum revenues made by a licensee shall be allocated by the against
amounts payable in the order in which they become due and in such a way as to
minimize any interest or penalties payable by a licensee.

Failure to Furnish Returns

 Late filing of a return or any other document within attracts a fine of at least USD
50,000 but not exceeding USD 500,000.
 A licensee convicted of an offence of late filing of the return or document and fails
file the same within a period specified by the court or furnishes false or inaccurate
returns, is  liable to a fine not exceeding USD 100,000.

Making False or Misleading Statements

A prescribed licensee or person in relation to a prescribed licensee who is convicted

of an offence of making false or misleading statements shall be liable –

(a) to a fine of at least USD 1,000,000 or imprisonment for a term of utmost 5 years,
or both; when the statement or omission was made knowingly or recklessly, or

(b) in any other case, to a fine of at least USD 50,000 and not utmost USD
500,000;         

Penal Tax and Tax Offences

The penal tax for the tax offences such as obstructing a tax officer, aiding or abetting
a tax offence, relating to tax officers, committed by companies, tax officer appearing
on behalf of Commissioner and tax charged to be paid despite prosecution apply
to a licensee in respect of petroleum revenues and other taxes with the modifications
below:

(a) interest for late payment and penal tax under-provision of tax shall be interest
compounded daily at an annual rate equal to the average rates published by the BoU
plus five percentage points for each day on which the sums are overdue during any
month;

(b)  licensee already prosecuted or fined under Petroleum (Exploration, Development

and Production) Act or the petroleum agreement shall not be prosecuted or fined for
the same offence under the Tax Procedures Code Act.

Commissioner to undertake Audits

The right of Commissioner to undertake a tax Audit and any of his other mandate
under Income Tax Act shall not be limited by provisions in a petroleum agreement or
in any law.

Tax Rates for Licensees and Contractors

1. The income tax rate applicable to a licensee in relation to a petroleum operation is

30%.

3. The rate of non-resident contractor tax is 10%”;

Part IV: VAT Provisions

Licensees and other Persons required to register for VAT

The VAT registration threshold does not apply to:

 a licensee undertaking petroleum operations.

 a person undertaking the construction of a petroleum refinery or petroleum pipeline;
and
 a person undertaking midstream operations as defined by the Petroleum (Refining,
Conversion, Transmission and Midstream Storage) Act 2013.

Tax payable

Tax payable on a taxable supply made by a contractor to a licensee to undertake

petroleum operations is deemed to have been paid by the licensee to the contractor
provided the supply is for use by the licensee solely and exclusively for petroleum
operations
Calculation of Tax Payable by a Taxable Person for a Tax Period

VAT payable = X – Y ---------------------------(i)

Where, X is total output tax on taxable supplies in tax period; and Y is the total input
tax credit allowed in the tax period.

a)     For Contractor, X in equation (i) above excludes VAT deemed to have been
paid by licensee to the contractor, say L. 

Hence, Contractor’s VAT payable =( X – L) – Y

Where, X is total output tax in tax period; L is total deemed output tax, and Y is the
total input tax credit allowed in the tax period.

b)    For supplier, X in equation (i) above excludes VAT deemed to have been paid
by contractor to the supplier, say C. 

Hence, Supplier’s VAT payable = (X – C) – Y

Where, X is total output tax in tax period; L is total deemed output tax, and Y is the
total input tax credit allowed in the tax period.

c)     For licensee, Y in equation (i) above excludes VAT deemed to have been paid by
licensee to the contractor, say C. 

Hence, Licensee’s VAT payable = X  – (Y– C)

Where, X is total output tax in tax period; Y is the total input tax credit allowed in the
tax period and C is total input tax the licensee is deemed to have paid to the
contractor.

Credit for Input Tax

In calculating the tax payable by a licensee for a tax period, a credit shall be allowed
to the licensee in respect of:

(a) all taxable supplies made to the licensee during the tax period; or

(b) all imports of goods made by the licensee or import of services made by a
licensee or contractor if the supply or import is for use in the business of contractor
or licensee.

A licensee is entitled to a cash refund of any excess input tax paid in tax period even
if it is less than UgX 5,000,000; unless the licensee elects to have that amount offset
against future liability.  The interest due and payable on over payments and late
refunds shall not exceed principal tax.