As December draws to a close, many Ugandans are shifting attention to Christmas plans, travel, and a fresh start to the new year. Businesses are slowing down, offices are closing early, and conversations are becoming festive. Yet quietly, without ceremony, the tax year is also coming to an end.
At exactly 11:59 p.m. on 31 December, your financial year becomes final. From that moment, your income, expenses, assets, and declarations stop being provisional and become evidence. For the Uganda Revenue Authority (URA), this date is not symbolic. It is decisive.
End-of-year tax checks are therefore not about panic or last-minute tricks. They are about discipline, accuracy, and foresight. Whether you are a business owner, salaried individual, landlord, trustee, partner in a business, or manager of a non-governmental organization (NGO), this is the final window to ensure your tax affairs tell one consistent, defensible story.
- Reconciling Income – This is where most tax problems begin! Under Uganda’s Income Tax Act, tax is charged on income derived during the year of income. The challenge today is that income rarely comes from one obvious source.
Take Isaac, a Kampala-based consultant. His PAYE from employment is fully taxed, but during the year he also received consultancy fees paid through mobile money and bank transfers. Isaac assumed these were informal side earnings. When URA later matched bank inflows with his declared income, the gap became an additional assessment.
Businesses face the same risk. Bank deposits, mobile money collections, POS receipts, invoices raised, and digital platform payments must reconcile with accounting records and tax returns. Any unexplained difference becomes a red flag under the Tax Procedures Code Act, empowering URA to issue additional assessments. Year-end reconciliation is the only chance to correct these gaps voluntarily.
Uganda’s Electronic Fiscal Receipting and Invoicing System (EFRIS) has fundamentally changed tax compliance. EFRIS is not merely a system for issuing receipts. It is a digital policeman. Every EFRIS invoice tells URA: who sold, what was sold, when it was sold, the value of the sale, the VAT position,
Consider Rizik, who runs a hardware shop in Mbale. His sales are fully invoiced through EFRIS, but his VAT returns consistently show lower turnover. The mismatch is automatic. EFRIS does not forget. It does not negotiate. It simply reports.
Before year-end, VAT-registered taxpayers must reconcile EFRIS data with sales ledgers and VAT returns. If EFRIS knows more about your business than your tax return does, the system will win.
- Rental income has become one of URA’s fastest-growing areas of enforcement. It is passive for you, but active for URA.
Take Lilian, who owns two residential apartments in Wakiso. Rent is paid monthly through mobile money. Lilian declared part of the income but ignored months when tenants paid late or paid in cash. URA later reconstructed her rental income using banking and payment data, leading to additional tax, penalties, and interest. Under Ugandan law, rental income is taxed separately, with limited allowable deductions. For companies, rental income attracts 30% corporation tax. For individuals, graduated rental tax applies.
Before 31 December, landlords should reconcile rent received, confirm allowable expenses, and ensure correct declarations. Rental income feels passive, but to URA, it is structured, visible, and traceable.
- Expenses: When the “Business” Label Is Not Enough – Section 22 of the Income Tax Act allows deductions only for expenses incurred wholly and exclusively in the production of income.
Consider Shirlene, who runs a marketing agency. She paid school fees, household fuel, and personal travel through the business account, assuming the business label was sufficient. During an audit, these expenses were disallowed, converting “tax savings” into additional tax plus penalties. Cash expenses are even riskier. Unsupported cash payments above statutory limits are frequently disallowed in full.
An end-of-year expense review allows taxpayers to clean up classifications while corrections are still possible.
- PAYE, Withholding Tax, and VAT – These have proved to be the Most Dangerous Taxes to ignore. Agency taxes are where many businesses collapse. PAYE failures attract immediate penalties. Withholding tax must be deducted even where the supplier is registered. VAT errors compound quickly when left uncorrected.
Take Priscilla Enterprises, a small construction firm. The company paid engineers and consultants without withholding tax, assuming registration was enough. When URA assessed the company, it demanded the unpaid withholding tax, interest, and penalties, regardless of whether the consultants had declared income.
Before year-end, these taxes must be reconciled. They do not forgive delays.
- Partnerships: Shared Profits, Personal Exposure – Partnerships often operate informally, but tax law does not recognize informality.
Take Angela and Samantha, who jointly run a transport business. Profits were reinvested, not withdrawn, so neither partner declared income personally. URA later assessed each partner on their share of partnership profits, regardless of cash withdrawals. Partnership accounts must be finalized, and profit shares declared individually. Shared income does not mean shared liability.
- Trusts and NGOs – It is very important for me to bring to you that these are not Exempt by Assumption. Trusts are frequently assumed to be tax-free. They are not.
Trust income may be taxed at the trust level or in the hands of beneficiaries, depending on distributions. Poor documentation often leads to assessments.
NGOs face similar misconceptions. While certain income may be exempt, PAYE, withholding tax, and VAT obligations still apply.
Take Erinah Foundation, an NGO that paid staff and consultants from donor funds but ignored PAYE and withholding tax. URA later assessed the organization, jeopardizing both compliance and donor confidence. Year-end review protects both tax status and reputation.
- Assets, Capital Gains, and What Lingers After Cash Is Spent – Asset transactions remain visible long after money is gone.
Consider Namuli, who sold land in Mukono and reinvested the proceeds. Years later, URA assessed capital gains tax on the transaction, long after the funds had been spent. Businesses should also review asset registers and capital allowances to ensure accuracy.
- Waiver of Penalties and Interest: URA’s Christmas Santa to Taxpayers- Uganda’s current tax law provides a rare but time-bound opportunity for taxpayers to eliminate penalties and interest on outstanding domestic tax liabilities. Under the Tax Procedures Code (Amendment) Act, taxpayers who fully settle principal tax that was outstanding as at 30 June 2024 by 30 June 2026 qualify for a 100% waiver of all related penalties and interest, with partial payments attracting relief on a pro-rata basis; the waiver applies across income tax, VAT, PAYE and withholding tax, but excludes customs duties. The relief is strongest where taxpayers act voluntarily before audits, assessments, or enforcement actions commence, and once principal tax is paid, and missing returns are filed, the waiver is applied automatically on the taxpayer’s TIN account. In a data-driven environment powered by systems like EFRIS, which continuously reports sales and VAT information to URA, waiting until discrepancies are detected significantly weakens eligibility for relief. End-of-year action is therefore not merely about compliance; it is a strategic opportunity to reset tax positions lawfully, reduce cash outflows, and enter the new year without the burden of compounding interest and penalties.
The final test in Uganda’s modern tax system is no longer whether tax was paid, but whether your data agrees with itself across EFRIS, banks, returns, and third-party reports. Once January begins, your books stop being drafts and become evidence, assessed retrospectively in a system that does not forget. That is why 31 December is not merely the end of the year, but the line between correction and consequence. Review now, reconcile now, and disclose where necessary, because in a data-driven tax environment, preparation is not optional; it is protection.
The writer is a chartered Accountant and a chartered Tax Advisor.
