Uganda’s tax landscape saw a significant shift with the cessation of the tax relief provided under section 40D of the Tax Procedures Code Act 2014 as amended in 2023, that had provided waiver on interest and penalties accrued as of 30th June 2023. However, Uganda Revenue Authority (URA) has taken proactive steps to maintain a conducive atmosphere for compliance by recommending taxpayers to utilize the Voluntary Disclosure Program outlined in Section 66-1A of the Tax Procedures Code. This initiative offers a reprieve from penalties and interest that have accumulated, thus opening a gateway for taxpayers to clear their slate without additional financial burden.
So, what exactly does Voluntary Disclosure entail?
The VD program stands as a testament to URA’s commitment to encouraging a transparent tax culture. Designed as an incentive-based scheme, it facilitates a clean start for taxpayers who by engaging in the VD process, signifies a proactive step to rectify previously unreported or understated tax liabilities as well as misstatements in Tax Affairs. Here’s a closer look at the intrinsic objectives of embracing the VD initiative:
- Restoration of Good Standing: By coming forward voluntarily, individuals and businesses can restore their fiscal reputation and foster a positive relationship with tax authorities.
- Financial Relief: Participants in the VD program can breathe easier, as the dreadful accruals of penalties and interest, often a heavy fiscal yoke, are lifted, enabling them to regularize their tax affairs.
- Mitigating Legal Repercussions: Proactive disclosure reduces the likelihood of legal consequences typically associated with non-compliance.
So, who qualifies?
Uganda Revenue Authority (URA) has meticulously outlined the eligibility criteria and deadlines for Voluntary Disclosure to ensure clarity. Through this program, taxpayers are offered a chance for reconciliation, even when certain tax areas are undergoing scrutiny. For instance, if URA is examining a taxpayer’s Withholding Tax for the fiscal year 2022/2023, the taxpayer is still eligible to disclose voluntarily for either a different tax like Value Added Tax for the same period or for Withholding Tax for the previous year as long as the disclosure occurs for information that would not have been inevitably uncovered in the course of the ongoing compliance activities. This proactive step could result in partial immunity from prosecution, illustrating URA’s commitment to encouraging voluntary compliance over punitive action. Hence affirming that the window for Voluntary Disclosure is not just a chance for settling tax duties but a strategic turning point towards building a trusting relationship between the tax regulator and the public, critical for a well-functioning tax system.
