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The Incentive
Regime
Uganda's fiscal incentive
package provides for generous capital recovery terms, particularly for
investors whose projects entail significant investment in plant and
machinery and whose investments are medium/long term. The incentives
package includes:
Category
1- Initial Allowances
The incentives covered in this category are capital allowances expenses
which are deductible once from the Company's Income.
Initial allowances on
plant and machinery located in
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Kampala. Entebbe, Namanve, Jinja &
Njeru
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50%
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Outside
Kampala. Entebbe, Namanve & Jinja area
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75%
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Start-up
costs
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25%
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Scientific
Research expenditure
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100%
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Training
expenditure
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100%
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Mineral
exploration expenditure
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100%
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Category
2- Deductible Annual Allowances
Depreciable Assets specified
in 4 Classes ( sixth schedule) under declining balance method
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Class
I
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Computers
& Data handling equipment
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45%
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Class
2
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Automobiles,
Construction and Earth moving Equipment
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35%
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Class
3
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Buses,
Goods Vehicles. Tractors, Trailers, Plant & Machinery for farming,
manufacturing and mining
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30%
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Class
4
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Railroad
cars, Locomotives, Vessels, Office furniture, fixtures etc.
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20%
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Category 3
- Other Annual Depreciation Allowances
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Industrial
Buildings, Hotels & Hospitals
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5%
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Farming
- General farm works (Class 4 assets under sixth Schedule pan 1)
declining balance depreciation
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20%
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Horticulture
(Horticultural Plant & Construction of Green houses) Straight line
depreciation
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20%
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Normal depreciation
allowances with the addition of a special 50% initial allowance on plant
and machinery means that in the crucial early years of a project, the
effective corporation tax rate is considerably less than the nominal 30%
rate. - The enterprise keeps a high proportion of its cash flow and
income for further investment.
In addition to the
above, Uganda offers a zero rate of import duty tax on plant and
machinery as defined in the sixth schedule Chapters 84-85 of the HS Code
as well as a uniform corporate tax rate of 30% which is lower than in
most African countries. Provisions exist to allow for assessed losses
arising out of company operations including the loss from the investment
allowance to be carried forward. Such losses are allowed as a deduction
in determining the tax payer's chargeable income in the following year of
income. Uganda also has a fully liberalized Foreign exchange regime with
no restrictions on the movement of capital in and out of a country.
Contact us at:
The Investment Centre
Plot 28 Kampala Road
P.O. Box 7148
Kampala - Uganda
Tel: 256 41 301000
Fax: 256 41 342903
E-mail: info@ugandainvest.com
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