GUIDE TO ESTABLISHING AND DOING BUSINESS IN UGANDA
The registration/ formation and management of companies are governed by the companies Act 2012 and several other laws such as the Investment Code Act, The income tax Act, Value Added Tax Act, Uganda Citizenship and Immigration Control Act, National Social Security Fund Act among others.
GUIDE TO ESTABLISHING AND DOING BUSINESS IN UGANDA
The total area of Uganda is about 241 000 square kilometres of which about 44 000 are covered by fresh water bodies. As per the last population census conducted in 2014, the population of Uganda is approximately 37.58 million. English is the official language. Swahili and Luganda are also spoken. The capital city and seat of Go vernment is Kampala. Other major towns include; Jinja, Mbala, Arua, Entebbe, Gulu and Mbarara. The latest GDP figures is USD$21.49 billion.
The Government of Uganda strongly encourages private investment, both foreign and domestic. Efforts aimed at improving investment climate have been made at different levels such as; by reducing bureaucracy, streamlining the legal framework, fighting corruption and stabilising the economy.
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. Uganda also has a fully liberalised foreign exchange regime with no restrictions on the movement of capital in and out of the country.
Formation of a company in Uganda
(a) Local company
Companies, both local and foreign must be registered. A local company is one which is incorporated and registered in Uganda or a company whose major shareholding is held by Ugandans and the majority of its business is conducted in Uganda. Foreign companies and branch offices that are required to register as foreign companies.
A local company is one that is incorporated and registered in Uganda. The information required for the incorporation of a local company is as follows:
The proposed name of the Company’s business and the proposed principal place of business.
The full names, address, age, nationality, position and other occupations of all members/ shareholders and directors of the proposed company. The share capital of the company and the capital contribution of each member to the company. The statutory minimum number of members/ shareholders required for a limited liability company is one. Note that all the shareholders and directors of the company can be foreigners.
(b) Foreign company
Three certified copies of the company’s certificate of registration from the Country of origin. Three certified copies of the Memorandum and Articles of Association/ Constitution of the company.
A complete list of all the directors and the secretary of the company, their names, postal addresses, nationalities, business occupations and dates of birth.
A statement of all subsisting charges created by the company (particulars of subsisting debts of the company) if any. A list of the shareholders of the company.
The name and postal address of someone resident in Uganda authorised to accept on behalf of the company service of court process and any notices required to be served on the company. The full address of the principal/registered office of the company in Uganda. The company can initially use the address of its attorneys in Uganda.
Other Government approvals
Besides company registration, there is also a requirement for tax registration for any person doing business in Uganda. Upon application, the Uganda Revenue Authority issues a Tax Identification Number. This is the identifier in Uganda for business purposes.
Trading or operating licenses are issued by the respective Government or professional bodies where necessary, depending on the nature of business being undertaken. Local Government Authorities, for example Kampala Capital City Authority (KCCA), usually issue the trading licenses for businesses that are being established within the city. The investment license is issued by Uganda Investment Authority.
Under Ugandan immigration regulations, the requirement to obtain a visa to visit Uganda varies according to the visitor’s country of origin. Ugandan visa policy is based on the principle of reciprocity i.e all countries that require visas for Ugandans are also subject to visa requirements in Uganda.
Visitors from the following countries do not require visas: East African citizens and nationals of COMESA member countries, Angola, Comoros, Eritrea, Kenya, Malawi, Mauritius, Madagascar, Rwanda, Seychelles, Swaziland, Tanzania, Zambia, Zimbabwe, Antigua, Vanuatu, Cyprus, Tonga, St. Vincent and The Grenadines, Solomon Islands, Singapore, Sierra Leon, Malta, Lesotho, Jamaica, Grenada, Gambia, Fiji, Belize, Barbados, Bahamas, Italy (only diplomatic passports).
Visitors from other countries must obtain visas from Uganda’s diplomatic and consular missions abroad. Visas can also be obtained on arrival at Entebbe Airport or any other entry point in cases where foreign nationals cannot access a Uganda diplomatic and consular mission abroad, provided one satisfies the entry requirements. It is however advisable to get a visa before embarking on a trip to Uganda to avoid unnecessary paperwork at point of entry.
Entry visas should be distinguished from work permit / work visa. Once the company decides to hire a non-citizen, such an employee must apply for work permit. Uganda Immigration board is responsible for issuing work permits.
Taxation of companies
A corporate tax is levied on companies, partnerships and sole proprietorships. Any income arising out of any trade, profession, vocation or adventure in the nature of trade is taxable under special rules applicable to business entities unless otherwise specified as being exempt under the tax code.
The income of all companies accruing or derived from Uganda is taxable. A company is liable to pay tax separately from its shareholders. The sources of a company’s income on which tax can be levied include profits and gains from any business carried on for whatever period of time. Other sources include dividends from shares in other companies and interest from the use of the company’s property. The income tax rates are; Resident and Non Resident Companies - 30%, Branch tax - 30%, Branch profit Remittance tax - 15%
Depending on the nature of Investment, the country provides a huge market for the products/services given its rapidly growing population and the fairly sound purchasing power. Additionally, Uganda is a member of the Common Market for Eastern and Southern Africa (COMESA) and of the East African Community which also includes Kenya, Tanzania, Rwanda and Burundi. Additionally Uganda is a member of the ACP-EU partnership agreement between a number of African, Caribbean and Pacific states and the European Union.
Local investors and Ugandan citizens can own land while foreign investors are restricted to long term leases, usually from five to 99 years. Land can be obtained from private owners, local councils and other government agencies. A company may also decide to simply hire land for its intended purpose. Land within the city is scarce. It is advisable that the company retains an attorney or reputable real estate company to identify land that is suitable for intended activities.
There are several labour laws in place that are intended to protect both the employer and the employee. The labour laws include; The Employment Act, Occupational Safety and Health Act, The Workers’ Compensation Act and The Labour Disputes (Arbitration and Conciliation) Act. The local labour force is plentiful and cheap. Trade unions are not yet strong although collective bargaining agreements are in force with some companies.
ABOUT THE AUTHOR: Angualia Daniel (LLM)
is a Ugandan corporate lawyer. He is a Partner in the firm of Angualia Busiku & Co. Advocates. He is a member many boards.
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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.