Taxes payable by NGOs

Taxes payable by NGOs in Uganda

The Non Governmental Organisations Act which is the parent legislation on NGOs in Uganda is itself silent about taxation of NGOs. However, NGOs like any other organization are subject to the tax regime of Uganda.

Income tax

In respect to income tax, NGOs are charitable organizations and are exempt from payment of income tax. Under the Income tax act, income of an exempt organization is exempt from income tax. An NGO is an exempt organization under the Act. Income tax is that tax which is chargeable a persons income for a year of income. Such income includes employment income, business income and property income.

Customs duties

NGOs are also exempt from customs duties under the EAC-CMA which is the law that regulates customs in all the EAC partner states. Customs duty is that tax payable on imports or exports. With respect to imports, the specific tax payable is called import duty.  It is illegal to remove goods from a customs area at the Boarder entry point before they are duly reported and cleared. An owner or authorized agent (declarant) must on arrival at the customs boarder entry point declare to a customs officer the goods imported within 24 hours of arrival. However, NGOs are exempt from payment of customs duty on importation of goods for purposes of their operations. S. 114 of the EAC-CMA exempts from customs duty goods and equipment imported by international and regional organizations with diplomatic accreditation or bilateral or multilateral agreements with the partner states of the EAC for their official use.

Annual Returns filing

Annual returns to be filed by NGOs in Uganda

  • An NGO is required to keep accounting records of its income, expenditure, assets and liabilities.
  • To draw up a financial statement within 6 months of the close of every financial year.
  • Submit a report to the Bureau on its compliance with accepted standard of accounting practice and how they were applied in preparing the statement.
  • Submit to the Bureau annual returns and a report of the audited books of accounts by a certified auditor.
  • Declare and submit to the District Technical planning committee, the DNMC, SNMC of the area in which it operates estimates of income and expenditure, budget, work plan, information on funds received and the source of such funds.

Community Based Organizations are also required to submit to the SNMCs in their areas of operation annual returns, a report of the audited books of accounts by a certified auditor and to declare to the SNMCs their budget, work plan, information on funds received and sources of such funds.

Affiliated organizations

An affiliated organization is one which is formally or closely connected to or controlled by a nationally or internationally incorporated organization or group.

Such an organization cannot lawfully operate in Uganda unless it is also duly registered under the Act.

Adjudication and appeals mechanisms

The Act provides for the due process of adjudication of disputes and appeals mechanisms by NGOs. A person aggrieved/ dissatisfied by the decisions of the SNMC may appeal to the DNMC. A person aggrieved by the decision of the DNMC may appeal to the Bureau. The decisions given on such appeal must be in writing. A person aggrieved by the decision of the Bureau may appeal to the Adjudication committee of the Bureau. The adjudication committee of the Bureau is appointed by the minister and constituted of: a chair person who must be an advocate of the High Court with not less than 10 years standing; a representative or the Organization; a representative of the Bureau and two senior citizens. The adjudication committee has powers to confirm, set aside, vary, or quash the decision in question or require the Bureau to revise or review its decision or make such order as may be appropriate in the circumstances. A person who is dissatisfied with the decision of the Bureau may appeal to the High Court.