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DOING BUSINESS IN UGANDA / UGANDA BUSINESS GUIDE

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DOING BUSINESS IN UGANDA / UGANDA BUSINESS GUIDE

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Postby Uganda Info » Fri Mar 09, 2007 10:29 am

DOING BUSINESS IN UGANDA

STARTING A BUSINESS

STANDARDIZED COMPANY
Legal Form: Private Limited Company
Minimum Capital Requirement: 0
City: Kampala

Registration Requirements:

Procedure 1. Reservation of a name at the Office of the Registrar.


Time to complete: 5 days

Cost to complete: USH 2000

Comment: The procedure takes from 2 to 7 days.

Procedure 2. Obtain 5 necessary forms from the Uganda Bookstore.

Time to complete: 1 day

Cost to complete: USH 5,600 (USH 500-700 for each form, 5 forms for incorporation, and 3 for tax registration)

Comment: The documents are:
a. Statement of Nominal Capital (USH500)
b. Declaration of Compliance with the Requirements of the Companies Act (USH500)
c. Particulars of Directors and Secretaries (USH700)
d. Consent to act as Director of Company (USH500)
e. Notice of Situation of the Registered Office and the Registered Post Address (USH500).

Procedure 3. Sign the declaration of compliance before the Commissioner for Oaths.

Time to complete: 1 day

Cost to complete: USH 100000

Comment: Company form A2, which is the Declaration of Compliance with the Requirements of the Companies Act, needs to be commissioned (signed and sealed) before a Commissioner for Oaths who is an advocate. The other documents can be witnessed by any other reputable person as they are not on oath.

Procedure 4. Obtain Requisition for Bank Pay-in Slip and Bank Payment Advise Forms from the Uganda Registration Services Bureau

Time to complete: 1 day

Cost to complete: no charge

Comment: The time frame for paying government levies such as fees for licenses and certificates reduced due to the computerisation of the process thereby reducing the process from four working days, to only half an hour.

Procedure 5. Make payment of registration fees at a given bank.

Time to complete: 1 day

Cost to complete: no charge

Comment: Registration receipts are obtained directly from the bank where the fees were paid (within 30-40 minutes). Previously one would pay in the bank and the wait for three days to pick the receipts from Ministry of Justice.

Procedure 6. File with the Registrar General.

Time to complete: 1 day

Cost to complete: see comments

Comment: Registration has been changed from the judicial to administrative process through the creation of the Uganda Registration Services Bureau which is autonomous of the Ministry of Justice. The Registration Services Bureau is an independent agency handling all business registration related issues.

The relevant fees are:
a) Standard Filing fee: USH 410,
b) Certificate Fee: USH 1,000,
c) stamp duty of 0.5 % of the share of capital,
d) Flat fee for the Ministry of Finance collected by the Registrar: USH 23,000).
e) Registration fees depend on the amount of share capital and increases as the share capital increases for instance fees for a share capital of USH 5 million is USH. 6990, while for 10 million is USH. 9490. The Registration fees for a Company whose share capital does not exceed Shs 40,000 has been increased to Ushs 50,000. This amount increases as the share capital increases.

Procedure 7. File with the local office of the Uganda Revenue Authority a personal inquiry form for each director, and a corporate preliminary inquiry form. Receive a uniform Tax Identification Number (TID)

Time to complete: 3 days

Cost to complete: no charge

Procedure 8. Apply for Corporate Tax file number.

Time to complete: 1 day

Cost to complete: no charge

Procedure 9. Apply for VAT registration.

Time to complete: 1 day

Cost to complete: no charge

Procedure 10. An Inspector from URA inspects the business premises.

Time to complete: 1 day

Cost to complete: no charge

Comment: The current threshold for VAT is for only businesses whose annual returns are USH. 50,000, 000 (Fifty million) and above. However if the company's returns in a period of 3 months amount to UGSH 12,500,000 and above, then the company should register for VAT. Only registered income tax payers may apply for VAT. An Inspector from URA must inspect the business premises before a VAT certificate is issued.

Procedure 11. Apply for PAYE.

Time to complete: 1 day

Cost to complete: no charge

Comment: The Pay As You Earn (PAYE) is paid by the individual employees but collected by the company. This tax comes much later upon the company becoming operational. Particular rates are applied depending on the amount an employee earns in a year of income for instance 10% for amounts exceeding USH 1,560,000 and the amounts increase as the income increases.

Procedure 12. Obtain application forms for trading license

Time to complete: 1 day

Cost to complete: no charge

Comment: Kampala City has five administrative Divisions. For ease of distribution of trading Licenses, the exercise was decentralised to each division: Several Companies were appointed to collect dues on behalf of Kampala City Council (KCC) and are as follows:
1. Nicholas Enterprise for Kawempe Division
2. Investment Waters for Nakawa Division
3. Victoria Insglass for Kampala Central Division
4. Kisenyi Community for Rubaga Division
5. Rusere Enterprises Ltd for Makindye Division

Individuals simply go to the offices responsible for their respective administrative divisions to pay the required dues, that is after assessment. In some cases licensing officials move to tax payers directly. The business licensing is done with in the respective Divisions.

Procedure 13. The licensing officer arranges an inspection of the premises and fills out an assessment form.

Time to complete: 1 day

Cost to complete: no charge

Comment: The Trading License is a general business license required for all business firms including service enterprises. The issuing authority is the relevant Municipal Authority where the business premises are situated. A trading license can be obtained almost instantly provided the necessary documents on the nature of business to be undertaken are available and the amount is assessed by the Municipality or City Council. Standard forms are completed and are accompanied by Memorandum & Articles of Association and Certificate of Incorporation.

Obtaining a trade license from the Municipality prior to the year 2002 was quite cumbersome, taking about 1 month. With the ongoing privatisation of revenue collection in the Municipality, the procedure has been simplified.

Procedure 14. Pay the license fee at the bank.

Time to complete: 1 day

Cost to complete: see the following procedure

Comment:
License fee for opening up an office is USH 156,500.
License fee for carrying out a retail business is UGH 206,500
License fee for carrying out a wholesale business is 366,500.

Procedure 15. Obtain the trading license

Time to complete: 1 day

Cost to complete: USH 206500

Comment: The Inspectors (health and building) at the Municipality reserve the right to revoke and cancel the trade license if they deem it necessary.

Procedure 16. File a form with the National Social Security Fund (NSSF).

Time to complete: 4 days

Cost to complete: no charge

Comment: The National Social Security Fund (NSSF) is governed by the revised the National Social Security Fund Cap 222 revised Laws of Uganda, and is a compulsory saving Scheme ,which covers all employees in the private sector, including non governmental organizations and parastatal bodies that are not covered by the government Pension scheme. It is mandatory that every employer observes the following under the Act; -to register the organization with NSSF when the employer has 5 or more employees; -to register all his employees between the age of 16-35 years as members on the Fund.

The procedure takes from 1 to 7 days.

Procedure 17. Make a company seal

Time to complete: 5 days

Cost to complete: USH 225500

Comment: Company seal is a mandatory requirement. The cost varies depending on the size of the seal but ranges from USH 50,000 and above.

The procedure takes from 2 to 7 days.

FORMS OF BUSINESS ORGANISATION

A business may be conducted by individuals, partnerships, trust companies or branches of foreign companies.

A Ugandan company may be public or private, there is no distinction in the names as both are Limited. Companies are governed by the Companies Act, 1964. There is no minimum equity capital requirement for companies.

The private company is the most common vehicle for operating a business in Uganda. It can have a minimum of two members who do not have to be Ugandans.

A branch of a foreign company may operate in Uganda if it registers with the Registrar of Companies and delivers to the Registrar a certified copy of the Memorandum and Articles of Association and a certified translation in English, if necessary, and certain other information.

The accounts of the branch must be prepared and audited annually and a copy of the financial statements must be submitted to the Registrar for registration.

Locally registered private companies are also required to be audited, but are not required to submit their annual financial statements to the Registrar of Companies.

TAXATION

Individual income is taxed progressively at rates ranging from 4% to 15% for residents, and 15% to 20% for nonresidents. In 2002, corporate income was taxed at 30% for resident companies, and 35% for non-resident companies. Social security taxes are paid by both employers and employees. Rental income is taxed at a rate of 20% on 80% of the gross income. A value-added tax (VAT) is set at 17% for all businesses with annual turnover of $35 thousand or more. The tax holiday for foreign investments was eliminated in 1997, replaced with accelerated appreciation schedules.
Uganda Info
 
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