Double Taxation Treaties in Uganda By Busingye Nelly Presentation at Tax Academy Dec 2014 Nairobi, Kenya 8/10/20151

CONTENTS Introduction DTTs/ DTAs in Uganda Key issues from our report Conclusion 8/10/20152

Introduction DTAs have twin purpose to avoid double taxation and prevent fiscal evasion First DTA signed between Austria-Hungary and Prussia in 1899; Most DTAs signed before the 1960s were between developed countries. Since 1960s, an increasing number of DTAs signed between developed and developing countries, with a few between developing countries; By 2008, more than 50% of the DTAs concluded were between a developed country and either a developing country or an economy in transition. Around the same period, there was a surge in global foreign investment flows with both developed and developing countries experiencing significant inward increases; By 2010, there were 2976 DTAs [Compare this with 322 DTAs at the end of the 1960s and 1193 DTAs in 1990]. 3DTA PRESENTATIONMonday, August 10, 2015

DTTs/ DTAs in Uganda. Key issues from our report Report analysed key provisions in Treaties with Mauritius and Netherlands Records from UIA, show that the top FDI sources To Uganda for the period were UK, India, Kenya. Mauritius brings in FDI amounting to slightly below (US$ 506million) 4DTA PRESENTATIONMonday, August 10, 2015

Mauritius Has an extensive treaty network with 38 existing DTTs already in force, 13 of which are with African countries. Has a network of 36 investment promotion protection agreements under which Mauritius offers full protection of foreign investments including with 18 African Countries It has a low tax jurisdiction, with tax rates ranging from 0-20%, compared to Uganda’s 6-30%. Uganda – Mauritius DTT – effective since 1 st July /10/2015Nelly Busingye5

Mauritius continued The DTTs with Mauritius restrict taxing rights of capital gains tax on the sale of shares at rates ranging from 30-35%. Since there is no CGT in Mauritius, the potential tax savings for the Mauritius, the potential tax savings for the Mauritius registered entity are therefore very profitable, being taxed 0% instead of 35% 8/10/20156

Netherlands Netherlands is also considered a conduit jurisdiction with low tax rates for certain types of income e.g royalties. Netherlands has been ranked the 6 th country in receiving Ugandan exports at a value of US$90million; whereas Uganda imported goods worth US$133million and was ranked 9 th as a source of imports Two major companies in the oil sector, Tullow Oil and Total are also both operating with and through subsidiaries in the Netherlands. Netherlands exempts Capital Gains Tax However, both DTTs (Mauritius and Netherlands) provide that on the sale of immovable property, moveable property owned by a permanent establishment and ships and aircraft can be taxed in the source country. 8/10/20157

CLOSING REMARKS Provisions in DTTs can restrict developing countries’ ability to collect tax revenue CSOs need to carry out analysis of the DTT framework in their countries and point loopholes We need to influence and participate in policy processes around DTTs. We need to advocate for renegotiation of DTTs in our countries 8/10/20158