The Double Taxation Relief (Taxes on Income) (Uganda) Order 1993

Explanatory Note

(This note is not part of the Order)

The Convention with Uganda is set out in the Schedule to this Order.

The Convention provides for business profits not arising through a permanent establishment to be taxed only in the country of the taxpayer’s residence. Profits attributable to a permanent establishment may be taxed in the country in which the permanent establishment is situated (Articles 5 and 7).

Income from immovable property may be taxed in the country in which the property is situated (Article 6).

Shipping and air transport profits are generally to be taxed only in the residence state of the operator (Article 8).

The Convention includes rules for determining taxable profits when a company in one country is related to a company in the other (Article 9).

The rate of tax imposed in the country of source on dividends derived by a resident of the other is not to exceed 15 per cent of the gross amount of the dividends (Article 10).

The rate of tax imposed in the country of source on interest derived by a resident of the other country is not to exceed 15 per cent of the gross amount flowing to the other country. Certain categories of interest (e.g. interest paid to the Government of the other country) will be exempt from tax in the source state (Article 11).

The rate of tax imposed in the source country on royalties is limited to 15 per cent where the beneficial owner is a resident of the other country (Article 12).

The rate of tax on technical fees arising in one country and paid to a resident of the other country is not to exceed 15 per cent of the gross amount (Article 13).

Capital gains derived from immovable property may be taxed in the country in which the property is situated. Moveable property which is part of a permanent establishment or fixed base that an enterprise resident in one state has in the other state may be taxed in the other state, although gains from the alienation of ships or aircraft operated in international traffic are taxable only in the country of residence of the operator (Article 14).

The earnings of temporary business visitors are, subject to certain conditions, to be taxed only in the country of the taxpayer’s residence (Articles 15 and 16). Fees received by a resident of one country in his capacity as a director of a company resident in the other country may be taxed in the other country (Article 17). Income derived from the activities of artistes and athletes may be taxed in the country in which those activities are performed, although special rules apply to visits supported by public funds (Article 18). Occupational pensions (other than those paid in respect of government service) and annuities are to be taxed only in the recipient’s country of residence (Article 19) while government service salaries and pensions are normally to be taxed only by the paying Government (Article 20). Payments made to visiting students, apprentices and business trainees are generally exempt from tax in the country visited (Article 21). Other income (with the exception of income from trusts and estates of deceased persons under administration) not specified in the Convention remains taxable only in the recipient’s country of residence (Article 22).

Where income continues to be taxable in both countries credit will be given in the taxpayer’s country of residence for tax imposed by the other country. The credit to be given in the United Kingdom for tax imposed in Uganda includes credit for tax spared under certain provisions of Ugandan law (Article 23).

There are provisions safeguarding nationals and enterprises of one country against discriminatory taxation in the other country (Article 24), and for consultation (Article 25) and exchanges of information (Article 26) between the taxation authorities of the two countries.

The Convention will enter into force when the legislative procedures of both countries have been completed and they have each notified the other of this. The Convention takes effect in the United Kingdom, for corporation tax on the 1st April and for income tax on the 6th April, in the next calendar year after the later of the two notifications. The date of entry into force will in due course be published in the London, Edinburgh and Belfast Gazettes.