1. Claim All Eligible Business Expenses 

One of the easiest ways to reduce your taxable income is by claiming all allowable business expenses. In Uganda, only expenses that are “wholly and exclusively” for business purposes can be deducted. These may include:

• Rent for business premises

• Utility bills (electricity, water, internet used for business)

• Employee salaries and wages

• Travel expenses (related to business activities)

• Professional fees (like accounting, legal, and consulting services)

• Office supplies and stationery and many others.

Tax Hack:

Keep accurate records and receipts for every business expense. This not only helps you claim deductions but also prepares you in case of a URA audit. Use accounting software or apps to organize and store digital receipts for easy tracking.

2. Take Advantage of Tax Incentives and Exemptions 

Uganda offers several tax incentives and exemptions to encourage investment and business growth. Some of the key incentives include:

• Startup Expenses: You can claim tax deductions on startup costs like registration fees, legal fees, and initial marketing costs.

• Export Income: While exports are exempt from VAT, they are subject to Income Tax. Businesses must declare export income and pay the applicable income tax.

• Investment in Industrial Parks: Businesses that set up in designated industrial parks can get a 10-year tax holiday.

• Capital Allowances: You can claim depreciation on capital assets such as machinery, vehicles, and buildings, reducing your taxable income.

Tax Hack:

Claim your startup costs and capital allowances—they can cut your Income Tax bill.

If you're in exports, you don’t charge VAT, but still declare export income in your tax returns.

3. Use Carry-Forward Losses to Reduce Tax Liability. 

If your business made a loss in the previous year, you can carry forward that loss to offset profits in future years. However, the law allows losses to be carried forward for up to seven years, provided the business continues to operate and the loss is not from exempt income.

Tax Hack:

Keep accurate financial records and report losses honestly. This way, when your business becomes profitable, you can use the previous losses to reduce the taxable income within the allowed seven-year period .

4. Maximize VAT Input Tax Credits 

If your business is registered for VAT, you can claim input tax credits on VAT paid for business expenses. This reduces the total VAT payable to URA. Eligible expenses for VAT credits include:

• Business purchases and supplies

• Utility bills (electricity, water, internet)

• Business travel expenses

• Professional services (like legal and accounting fees)

Tax Hack:

Ensure that all invoices from suppliers include their VAT registration number and the amount of VAT paid. Keep all receipts and tax invoices safe as proof for claiming input VAT.

5. Optimize Payroll Taxes and Employee Benefits 

Businesses in Uganda are required to pay PAYE (Pay As You Earn) on employee salaries. However, you can reduce this by providing non-cash benefits that are tax-free or have lower tax rates. These include:

• Medical insurance for employees and their dependents

• Education allowances for employees' children

• Meal allowances during work hours

• Direct transport services for staff

Tax Hack:

Review your employee compensation structure and consider offering more non-cash benefits to save on PAYE. Consult with a tax advisor to ensure compliance with URA guidelines.

6. File and Pay Taxes on Time to Avoid Penalties and Interest 

One of the simplest ways to save money is by avoiding penalties and interest charges from URA. Late filing or payment of taxes attracts heavy fines and interest.

Tax Hack:

Set reminders, hire a tax consultant or use accounting software to ensure that you meet all tax filing deadlines. Paying taxes on time saves you money and keeps your business in good standing with URA.

Conclusion: Save Money While Staying Compliant!

NOTE: Saving money on taxes doesn’t mean breaking the law.

Need Help with Tax Planning?

Contact us today for professional tax advisory services tailored to your business needs - info@ardenfield.com .