Uganda cross-border: residence, source, withholding on non-residents, branch profits and foreign tax credit (2026-27)

Part IX (International Taxation) of the Income Tax Act, Chapter 338 (Revised Edition 2024; Part IX of the old Cap. 340), sets how non-residents are taxed on Ugandan income and how residents are relieved for foreign tax. The rates are in Schedule 4. The Income Tax (Amendment) Act 2026, in force from 1 July 2026, changed royalties and debenture interest. The Uganda Revenue Authority (URA) administers the tax. The year of income normally runs from 1 July to 30 June; this skill covers the year to 30 June 2027.

Who this applies to

• Resident individuals (ITA s9). An individual is resident for a year of income if they:

  • have a permanent home in Uganda;
  • are present for 183 days or more in any 12-month period that begins or ends in the year;
  • are present in the year and the two years before for an average of more than 122 days a year; or
  • are a Government of Uganda employee or official posted abroad.

  In the year of arrival, residence runs from the first day present. In the year of departure, it runs to the last day present (s9(2)–(3)).

• Resident companies (ITA s10). A company is resident if it:

  • is incorporated or formed in Uganda;
  • has its management and control exercised in Uganda at any time in the year; or
  • carries out the majority of its operations in Uganda in the year.

• Non-residents are taxed on Ugandan-source income (s78). That is through a branch, by final tax on specific payments (ss82–85, made final by s87 and mostly withheld by the payer under s137), or, for digital services, by a 5% tax the non-resident itself returns (s86).

• Branch (ITA s77). A place where a person carries on business. It includes:

  • a dependent agent (not a general agent of independent status acting in the ordinary course of business);
  • substantial equipment or machinery used or installed for 90 days or more;
  • a construction, assembly or installation project of 90 days or more, including supervision;
  • services furnished through employees or other personnel for the same or a connected project for more than 90 days in any 12-month period.

Not covered here, refer to a specialist: treaty rates and the treaties' own permanent establishment tests; mining and petroleum (Part X); withholding on residents; VAT on imported services.

Rates, bands and thresholds

Item	Amount	Source
Non-resident tax on dividends, interest, royalties, rent, natural resource payments, management charges (s82), entertainers (s83), contractors (s84) and branch profits (s81)	15% of the gross amount (branch profits: of repatriated income)	ITA Ch. 338 Sch. 4 Part V para 1
Interest on Government securities to a non-resident	20% (maturity not exceeding 10 years); 10% (maturity of at least 10 years). The text puts exactly 10 years in both limbs	ITA Ch. 338 Sch. 4 Part V para 2
Non-resident digital services to customers in Uganda	5%	ITA Ch. 338 s86; Sch. 4 Part V para 3
Non-resident telecoms, internet connectivity and direct-to-home pay services	5% of gross	ITA Ch. 338 s85(4)
Non-resident ship and air transport operators (passengers, cargo or mail embarked in Uganda) and road transport operators (cargo or mail embarked in Uganda); trans-shipment excluded	2% of gross	ITA Ch. 338 s85(2); Sch. 4 Part VI
Company income tax (branch chargeable income)	30%	ITA Ch. 338 Sch. 4 Part III para 1
Royalties to non-residents (including software) from 1 July 2026	15% withholding; digital service tax does not apply	URA, Tax Amendments FY 2026-27, p. 6
Interest paid by a resident company to a bank or financial institution of a public character outside Uganda on widely issued debentures (s82(5) exemption repealed)	5% withholding on the gross interest, from 1 July 2026	URA, Tax Amendments FY 2026-27, p. 8
Branch, project and services time tests	90 days or more (equipment, projects); more than 90 days in any 12 months (services)	ITA Ch. 338 s77
Interest on tax, or tax withheld, not paid by the due date	2% per month, simple; borne personally by a withholding agent; capped so it does not exceed principal tax plus penal tax	ITA Ch. 338 s148(1), (4), (5), (7)

The base

Ugandan-source income (s78). The main categories are:

• business income of a non-resident carried on through a branch in Uganda;
• employment income or service fees for work done in Uganda, or paid by a resident (unless it is an expense of the resident's foreign branch), or paid by a non-resident as an expense of its Ugandan branch;
• rent from Ugandan immovable property;
• gains on disposing of an interest in Ugandan immovable property, or of shares in a company whose property is principally such interests, where the interest or share is a business asset;
• a direct or indirect change of 50% or more in the ownership of a person located in Uganda (other than an individual, a local government or its political subdivision, and a listed institution);
• royalties paid by a resident or a Ugandan branch, or from disposing of intellectual property used in Uganda;
• interest secured on Ugandan property, paid by a resident, or for a Ugandan business;
• dividends and directors' fees paid by a resident company;
• management charges paid by a resident;
• any other activity in Uganda.

Final tax on gross payments (ss82–85, s87). Tax on non-residents under ss82, 83, 84, 85(1) and 85(4) is charged on the gross amount and is a final tax (s87(1)). The income is left out of gross income, nothing is deductible, and the liability is met once a withholding agent has withheld it under s137 and paid it under s140.

• Payments covered:
  • dividends, interest, royalties, rent, natural resource payments, management charges and (for Islamic finance) agency fees (s82);
  • payments to public entertainers and sports persons (s83; the promoter or agent withholds, s137(2));
  • payments under a Ugandan-source services contract (s84; royalties and management charges stay under s82);
  • transport and telecommunications (s85).
• Who withholds: the person making a payment under s82, s84 or s85 (s137(1)). Nothing is withheld from an exempt payment (s137(3)).
• Digital services (s86) are not in this list: s87 does not name s86 and s137 does not require withholding on it; the non-resident pays and returns the tax itself (see below).
• Dividends are Ugandan-source only to the extent paid out of Ugandan profits, which are treated as distributed first (s82).
• Branches: s82 does not apply to amounts attributable to the activities of a non-resident's Ugandan branch; they fall into the branch's gross income under s17 instead (s82(6)).

Digital services (s86). A non-resident earning income from digital services delivered over the internet, an electronic network or an online platform to a customer in Uganda pays 5%. The services include:

• online advertising;
• data services;
• online marketplaces and intermediation platforms (accommodation, vehicle hire, transport);
• digital content;
• online gaming;
• cloud computing and data warehousing;
• services delivered through social media or search engines;
• others the Minister prescribes.

The non-resident files a return within 15 days after the end of the tax period. From 1 July 2026, royalties are excluded from digital service tax and bear the 15% withholding instead (URA handbook p. 6).

Branch profits tax (s81). A non-resident company with a Ugandan branch also pays 15% on the branch's repatriated income for the year, on top of the 30% on its chargeable income. Repatriated income = A + (B − C) − D, where:

• A is the cost base of the branch's net assets at the start of the year;
• B is the branch's accounting net profit;
• C is the Ugandan tax on the branch's chargeable income;
• D is the cost base of net assets at the year end.

Residents' foreign income.

• Foreign tax credit (s80). Credit for foreign income tax (including foreign withholding) on foreign-source income. It is capped at the taxpayer's average Ugandan rate x net foreign-source income, and computed separately for business and other foreign income. Foreign "soak-up" taxes do not count.
• Foreign employment income (s79). A resident individual's foreign-source employment income is exempt if foreign income tax was paid on it. Tax withheld by a foreign employer counts.

Treaties (s88).

• A double taxation agreement has effect as if it were in the Act, and prevails over the Act. Two exceptions: the anti-avoidance Part XI, and the treaty-benefit test.
• Treaty-benefit test (s88(7)). Except for public listed companies, a treaty exemption or rate reduction is denied to a person who is not the beneficial owner (without full and unrestricted ability to enjoy and decide on the income) and who has no economic substance in its residence country.
• Exchange of information: where an agreement provides for automatic exchange of information, the Commissioner General facilitates it as prescribed (s88(4)).

Deadlines and filing

Obligation	When	Source
Withholding agent pays tax withheld (or that should have been withheld) from non-residents and files the WHT return	within 15 days after the end of the month of payment; WHT return by the 15th of the following month	ITA s140(1); URA, File a Tax Return
Notify URA of an agreement with a non-resident for services giving rise to Ugandan-source income	within 30 days of entering into the agreement	ITA s138(1)
Non-resident digital services return	within 15 days after the end of the tax period	ITA Ch. 338 s86(4)
Annual return (including a branch and its branch profits tax)	within six months after the end of the accounting period; extensions up to 90 days in total, with the payment date unchanged	URA, File a Tax Return
Tax withheld by a promoter or agent from non-resident entertainers or sports persons	within five days of the performance or by the day before the non-resident leaves Uganda, whichever is earlier	ITA s140(2)
Non-resident entertainers' group tax not withheld	each member remits before leaving Uganda	ITA s83(4) (s84(4) in old Cap. 340)

Penalties and interest

• Withholding agents: under s87 the non-resident's liability is satisfied only when the tax is withheld and paid. An agent that fails to withhold is personally liable for the tax not withheld and may recover it from the payee (s142(1)). A person who does not notify URA of a non-resident services agreement within 30 days is personally liable for the non-resident's tax on it (s138(4)).
• Interest: 2% per month, simple, on tax or tax withheld not paid by the due date; for a withholding agent it is borne personally and cannot be recovered from the payee; interest above principal tax plus penal tax is waived (s148(1), (4), (5), (7)).
• Penal tax: set by the Tax Procedures Code Act, not read for this version; see "Not yet confirmed".
• Treaty claims: a treaty benefit claimed without beneficial ownership and substance is denied (s88(7)), so the full domestic rate applies.

Cross-border points

This whole skill is about cross-border points. In short:

• residence follows the s9 and s10 tests;
• non-residents are taxed through a branch at 30% plus 15% branch profits tax, or by 15% final tax on gross payments (2% for transport, 5% for telecoms), and non-resident digital service providers pay 5% on their own return;
• residents get a capped, basket-by-basket foreign tax credit;
• treaties prevail, subject to the beneficial-owner and substance test.

Two worked examples that recompute

Example 1: branch profits tax on a non-resident's Ugandan branch

Lakeside Engineering BV (Netherlands) runs a branch in Kampala. For the year to 30 June 2027:

• net assets at cost base were UGX 2 000 000 000 at the start (A) and UGX 2 100 000 000 at the end (D);

• the branch's accounting net profit is UGX 900 000 000 (B);

• its Ugandan tax on chargeable income is UGX 270 000 000 (C).

• Repatriated income: 2 000 000 000 + (900 000 000 − 270 000 000) − 2 100 000 000 = UGX 530 000 000.

• Branch profits tax at 15%: UGX 79 500 000, on top of the UGX 270 000 000.

• Total Ugandan tax: UGX 349 500 000. A treaty may change this; check s88 and the treaty.

name: Uganda branch profits tax, A 2.0bn, B 900m, C 270m, D 2.1bn (2026-27)
inputs:
  opening_net_assets: 2000000000
  accounting_profit: 900000000
  ugandan_tax: 270000000
  closing_net_assets: 2100000000
  bpt_rate: 0.15
steps:
  - repatriated: opening_net_assets + (accounting_profit - ugandan_tax) - closing_net_assets
  - branch_profits_tax: repatriated * bpt_rate
  - total_tax: ugandan_tax + branch_profits_tax
expected:
  repatriated: 530000000.00
  branch_profits_tax: 79500000.00
  total_tax: 349500000.00

Example 2: resident company's foreign tax credit cap

Mbarara Traders Ltd (Uganda resident) has chargeable income of UGX 1 000 000 000. That includes net foreign-source business income of UGX 200 000 000 from a Rwandan branch, which paid UGX 70 000 000 of Rwandan tax. Ugandan tax before credit is 30% = UGX 300 000 000, so its average Ugandan rate is 30%.

• Credit cap: 30% x 200 000 000 = UGX 60 000 000.
• Credit allowed: the lower of the 70 000 000 paid and the 60 000 000 cap = UGX 60 000 000. The other 10 000 000 is not credited.
• Net Ugandan tax: 300 000 000 − 60 000 000 = UGX 240 000 000.

name: Uganda foreign tax credit cap, s80 (2026-27)
inputs:
  chargeable_income: 1000000000
  net_foreign_income: 200000000
  foreign_tax_paid: 70000000
  rate: 0.30
steps:
  - ugandan_tax: chargeable_income * rate
  - average_rate: ugandan_tax / chargeable_income
  - credit_cap: average_rate * net_foreign_income
  - credit: min(foreign_tax_paid, credit_cap)
  - net_tax: ugandan_tax - credit
  - unrelieved: foreign_tax_paid - credit
expected:
  ugandan_tax: 300000000.00
  average_rate: 0.30
  credit_cap: 60000000.00
  credit: 60000000.00
  net_tax: 240000000.00
  unrelieved: 10000000.00

Ask the client first

1. For individuals: a permanent home in Uganda, and days present in each 12-month period and in the last three years.
2. For companies: the place of incorporation, where management and control is exercised, and where most operations are carried out.
3. What the non-resident does in Uganda: agents, equipment, projects, or staff on site, and for how many days.
4. Each payment to non-residents by type (dividend, interest, royalty incl. software, rent, management charge, services, entertainment, transport, digital services), with the amounts and the withholding deducted.
5. Whether a treaty is claimed, and evidence of beneficial ownership and economic substance.
6. For residents with foreign income: foreign tax paid, split into business and other income.

Sources

Source	URL	Read on
Income Tax Act, Chapter 338, Revised Edition, as at 23 December 2024, ULII PDF (read for s9, s10, s17 heading, ss77–88, ss137–142, s148 and Schedule 4 Parts III, V and VI; ULII notes Act 13 of 2025, Act 18 of 2025 and Act 21 of 2026 are not yet applied)	https://ulii.org/akn/ug/act/1997/11/eng@2024-12-23	2026-11-02
URA, Compendium for various Domestic Tax Laws (as of July 2021), ITA Cap. 340 Part IX (read for ss78–88, to compare with the 2024 numbering)	https://ura.go.ug/en/download/compendium-for-various-domestic-tax-laws/	2026-11-02
URA, Tax Amendments FY 2026-27 handbook (read for pp. 6, 8 and 10: royalties, debenture interest and entertainers)	https://ura.go.ug/en/download/tax-amendments-fy-2026-2027/	2026-11-02
URA notice, effective date of the Income Tax (Amendment) Act 2026 (read for the commencement date, 1 July 2026)	https://ura.go.ug/en/effective-date-of-the-income-tax-amendment-act-2026-and-the-excise-duty-amendment-act-2026/	2026-11-02
URA, File a Tax Return (read for the annual and monthly return deadlines and extensions)	https://ura.go.ug/en/domestic-taxes/returns/	2026-11-02

Not yet confirmed:

• The enacted Income Tax (Amendment) Act 2026 (Act 21 of 2026). The handbook summarises the Bill, and URA confirms commencement on 1 July 2026.
• The 2025 amendment Acts (Act 13 of 2025, Act 18 of 2025).
• Whether the new 6% withholding on payments to public entertainers (handbook p. 10) applies to non-residents in place of 15%.
• The withholding-agent penal tax under the Tax Procedures Code Act.
• The full reach of the debenture change: the handbook describes the 5% only for interest paid to a bank or financial institution of a public character; whether widely issued debentures held by others now bear 5% or the 15% s82 rate, and whether the 5% is a final tax, needs the enacted Act.
• The list of treaties in force and their rates.