How does provisional tax work in Uganda?
Provisional tax is income tax paid in advance on an estimate. Companies pay two instalments at months 6 and 12; individuals pay four at months 3, 6, 9 and 12.
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Detailed Explanation
## Companies
File the provisional return by the last day of the sixth month and pay half of the estimated tax then and the rest by the end of the twelfth month.
## Individuals
Sole proprietors and partners file by the end of the third month and pay four instalments.
## Getting the estimate right
If the estimate is below 90% of the actual chargeable income, URA charges 20% of the difference in tax. Unpaid tax carries interest of 2% a month.
## Who is excluded
Presumptive taxpayers do not pay provisional tax.
Source: https://ura.go.ug/en/ask-ura-commissioner-general-30/
Real-World Examples
Company on a June year-end
Pays half the estimate by 31 December and half by 30 June.
Sole proprietor
Files by 30 September and pays on 30 September, 31 December, 31 March and 30 June.
Common Mistakes to Avoid
- Lowballing the estimate
- Missing the second instalment
Frequently Asked Questions
Can I change my estimate?
Yes, during the year.
What if I underestimate?
A 20% penalty applies below 90% of the actual figure.
Practical Tips
- Use management accounts at month 5 to set the estimate
- Revise the estimate if trading changes
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