Beat the tax clock

_________________

OPINION

By Joshua Kato, CA.

As the curtain falls on 31 December 2025, Uganda’s taxpayers, both corporate entities and individual filers, face what many accountants call the Closing Bell Moment: a final reckoning of books, returns, reconciliations, and compliance obligations. Today, Uganda’s tax register stands at close to five million Tax Identification Numbers (TINs).

Of these, over 4.6 million belong to individuals, while more than 220,000 are corporate and non-individual entities, companies, partnerships, trusts, and institutions operating across the economy. This expanded tax base reflects URA’s aggressive formalisation drive, powered by digital systems, third-party data, EFRIS, and deeper inter-agency information sharing. In simple terms, more people are visible, more transactions are traceable, and fewer errors go unnoticed.

That rapid expansion in the tax base reflects a concerted push by URA to broaden coverage and bring more Ugandans into the formal fold. Yet the sheer size of the register masks deeper challenges: many taxpayers struggle to match system records with reality, others underestimate their liabilities, and a significant proportion of business owners simply don’t know what filings are due by year-end.

For many, this season will be defined less by holiday cheer and more by tax compliance urgency. The next few paragraphs lay out ten strong checkpoints every taxpayer must clear before the year closes, so you don’t wake up on January 1, 2026, with arrears, penalties, or a surprise URA audit letter.

“In a tax landscape rapidly tightening around digital footprints, bank disclosures and third-party data, ignorance is no longer a defence, it’s a liability. As we approach 31 December, compliance isn’t just paperwork, it’s survival.”

I bring to you ten critical checkpoints every taxpayer must clear before midnight on 31 December 2025, with practical guidance on what to do and why it matters.

1. Do Your Numbers Speak One Language? - If your bank statements, cash collections, sales records, and system declarations tell different stories, URA will believe the most complete one. Before year-end, taxpayers must reconcile all revenue streams, banked and unbanked, against declared sales. Unexplained gaps are often treated as undeclared income, not accounting errors.
   
   
2. EFRIS Is Evidence, not a Formality - Where EFRIS applies, sales must be properly invoiced or receipted. December reviews should focus on missing receipts, delayed invoicing, and questionable credit notes. In the digital tax era, sales that exist commercially but not systemically are viewed as concealed.
   
   
3. PAYE: Salaries Are Easy, Benefits Are Not - Most PAYE exposures arise from benefits, not basic pay. Fuel, airtime, housing, per diems, school fees, and year-end bonuses must be reviewed carefully. If money left the employer’s account for an employee’s benefit, PAYE questions will follow. Align payroll records to actual payments now, not during an audit.
   
   
4. Consultant or Employee? Substance Always Wins – I have always highlighted this aspect in different tax symposiums. If a “consultant” works fixed hours, reports to a manager, uses company tools, and earns only from one entity, URA may reclassify the arrangement. Year-end is the right time to test contracts against reality and ensure the correct tax treatment, whether PAYE or withholding tax, is applied.
   
   
5. Withholding Tax - Withholding tax rarely causes noise until it becomes large. Payments to suppliers and service providers should be reviewed to confirm correct deductions, timely payments, and issuance of certificates. Unpaid withholding tax is a trust tax, and URA treats it firmly.
   
   
6. VAT Claims Must Be Defensible, Not Optimistic - Input VAT claims must be supported by valid tax invoices and linked to taxable supplies. Persistent VAT credits or refunds should be reviewed early, with documentation organised. VAT audits are technical and unforgiving; weak support can collapse entire claims.
   
   
7. Provisional Tax Should Reflect Reality, Not Hope - Many taxpayers underestimate provisional tax at the start of the year and only realise the error when assessments arise. Comparing actual performance against provisional estimates before year-end allows corrective action and reduces interest and penalty exposure.
   
   
8. Expenses Must Survive Scrutiny - An expense without evidence is not a deduction; it is a risk. Large, unusual, or recurring expenses should be backed by contracts, invoices, proof of service, and payment records. Entertainment and miscellaneous costs deserve special attention, as they attract frequent audit interest.
   
   
9. Stock and Assets Must Exist Where the Records Say They Do - A physical stock count before year-end is critical. Missing stock is often presumed sold, and therefore taxable. Fixed asset registers should be updated to reflect additions, disposals, and usage. Poor asset records routinely lead to income and VAT adjustments.
   
   
10. Rental Income: Cash Does Not Mean Invisible - Landlords often forget rental tax until URA remembers for them. Reconcile rent received, whether collected by caretakers, cash, or mobile money, against tenancy agreements. The obligation remains with the property owner.
    
    
11. Partnerships: Profit Follows You Personally - Partnerships do not pay tax like companies; partners do. Finalise partnership accounts, allocate profits clearly, and ensure each partner declares their share. “My partner handled tax” is not a defence.
    
    
12. Kikuubo & Presumptive Traders: Growth Changes Rules - Presumptive tax is not permanent immunity. If turnover has grown beyond thresholds, transition to normal income tax voluntarily. Growth discovered by URA is usually taxed retroactively with interest.
    
    
13. Side Hustles Must Be Aggregated - Salary earners with side incomes, consulting, farming, transport, and online sales, must consolidate all income under one TIN. PAYE on salary does not automatically cover other earnings.
    
    
14. Digital Creators: Likes Are Not Tax-Free - YouTubers, TikTokers, influencers, bloggers, gamers, and online marketers must declare monetised income from ads, brand deals, affiliate links, gifts, and platform payouts. Foreign platforms do not mean foreign tax immunity.
    
    
15. Old Tax Issues Age Badly - Unresolved arrears do not fade; they grow. Reconcile outstanding balances, distinguish principal tax from penalties and interest, and explore settlement or waiver options where applicable. December is cheaper than January.
    
    
16. The Tax Waiver Window: The Final Chance to Clean Your Plate - For taxpayers with lingering tax debts, Uganda has reopened a powerful compliance window, but it comes with fixed deadlines and conditions you must meet to benefit. Under the Tax Procedures Code (Amendment) Act, 2025, the Government and URA have provided that any outstanding interest and penalties on domestic taxes (income tax, VAT, corporate and personal, PAYE, withholding tax, and excise duties) as of 30 June 2024 will be waived if the taxpayer pays the full principal tax owed by 30 June 2026.

To qualify, you must first reconcile your URA account, file all missing returns, and confirm the unpaid principal tax, not just part of it. Once the principal amount is cleared by the deadline, all accrued penalties and interest are automatically waived and reflected in your TIN account. If you cannot pay the full principal at once, making instalment payments still entitles you to a pro-rata waiver of penalties and interest proportional to the amount of the principal you settle. This tax waiver is not open-ended nor routinely extended: URA has emphasised this will be the final amnesty window and that after 30 June 2026, taxpayers will be liable for all interest and penalties in addition to any principal arrears.

At 11:59pm on December 31, 2025, your books cease to be working papers and become legal evidence. What is unreconciled, unsupported, or undeclared today does not disappear with the new year. It resurfaces as assessments, penalties, interest, and audits. In a tax system increasingly driven by data, digital trails, and third-party intelligence, compliance is no longer a defensive exercise; it is a deliberate business strategy.

The smartest taxpayers are not those who hide from visibility, but those whose records speak with clarity, consistency, and credibility across bank statements, systems, returns, and reality. Because in taxation, the most expensive words a taxpayer can ever utter remain: “We thought we still had time.”

The writer is a Chartered Accountant, and Tax Advisor