MSME Legal Literacy- Africa

WHO ARE YOUR MOST TRUSTED/RESPECTED COMPANIES IN UGANDA & WHICH BUSINESS LEADERS DO YOU ADMIRE THE MOST?

Have your say⏤ take The CEO East Africa Magazine's Most Trusted & Respected Companies/Organisations as well as the Most Admired CEOs/Business Leaders Survey 2024.

FOLLOW THIS LINK: https://www.surveymonkey.com/r/UGCEO100Index

The March 2020 appointment of John Musinguzi Rujoki, a former Senior Presidential Advisor on ICT and Investment Matters and a computer scientist by background⏤ met mixed reactions from stakeholders who considered him an 'outsider' to the system who didn't have prior experience in mainstream tax management.

However, his supporters argued that the relevant changes that needed to be done at Uganda Revenue Authority (URA), needed someone from the outside to shake it down and John R. Musinguzi was the man for the job.

Indeed, his performance record in his first term has disproved his critics.

📌Under Mr. Musinguzi's leadership, revenue collection has grown by over 50.48% from UGX 16,751.64 billion in FY 2019/20 (the time he joined URA) to UGX 25,209.05 billion in FY 2022/23.

📌Uganda has also recorded the highest tax-to-GDP ratio⏤14 percent, the highest in the 33 years. This was achieved during FY 2022/23 according to statistics from the authority.

📌The tax register has grown by 154.96 per cent from 1,594,116 in 2019/20 to 4,064,432 taxpayers by half year of FY 2023/24.

John R. Musinguzi, reappointed Uganda Revenue Authority (URA) Commissioner General for a second 4-year term – CEO East Africa At The CEO Magazine, we are driven by the notion that every business is a story that deserves to be shared.

UNPLUGGED: Alice Namuli Blazevic⏤ tech lawyer, and one of the best at the game; a confessed lover of the outdoors and a fierce lover of nature and humankind.

And she has a message for you: "Tech yourself and business up, or die".

Alice Namuli Blazevic⏤ A technology lawyer extraordinaire – CEO East Africa At The CEO Magazine, we are driven by the notion that every business is a story that deserves to be shared.

As a first-time Chief Executive, Anne Juuko, amongst many other highlights, successfully and profitably led Stanbic Bank through the turbulent Covid-19 pandemic.

According to Patrick Mweheire, the Standard Bank Group Regional CE for East Africa and Anne Juuko's supervisor and predecessor, the Group is "very proud of the exceptional job she has done—leading the business to record-breaking numbers, through what was a challenging period" and "would love to keep and see her take on even bigger responsibilities within the Group".

Anne Juuko to take up Nairobi-based Standard Bank Regional Global Markets role this March – CEO East Africa At The CEO Magazine, we are driven by the notion that every business is a story that deserves to be shared.

As an employee, do you know the Benefits you derive by nature of your status as Employee? Here are benefits conferred by law (statute) 1. Maternity Leave.: a female employee is entitled to 60 workinfg days of maternity leave following the delivery/miscarriage of their child 2. Partenity Leave; all male employees are entitled to 4 working days of leave following the delivery or miscarriage of their child
3. Notice of termination of employment;although this is dependant on the period of continous service.
4. Weekly rest. Atleast one day off for every 6 days worked and 30 mins break for 8 hours of work a day.
5.Overtime pay; this is calculated at a rate of 1.5 times the salary or wage of employee.
6. Wage,Salary or Pay; An employee is entitled to receive pay for work done and deductions on the wage can only be made in accordance with law i.e for PAYE, NSSF,LST and others. 7.Compensation for work related injuries
8. Repartriation; upon termination of a contract, an employer is obliged to return an employee back to their home or place of recruit as long as the same is within 100km radius.

What are some of the benefits you receive at your work place? Labour World Connect Employment Forum Uganda

Taxation!
Uganda's tax treatment falls under two broad Categories,
1. Direct Tax;- which are imposed on income arising from business,employment, property e.g Corporation tax, Individual Income Tax, e.g. Pay As You Earn, capital gains tax and rental tax.
2. Indirect Taxes are taxes levied on consumption of goods
and services collected by an Agent (Taxpayer)e.g Value Added Taxes (VAT), excise duty, import duty.

*Employment Tax; how is it calculated?*
Monthly emoluments Tax Rate (Bracket)
1. Not exceeding Shs 235,000. Nil
2. Exceeding Shs 235,000 but not exceeding Shs 335,000. 10% of the amount by which chargeable income exceeds Shs235,000.
3. Exceeding Shs 335,000 but not exceeding Shs 410,000.
Shs 10,000 plus 20% of the amount by which chargeable income exceeds Shs 335,000.
4. Exceeding Shs 410,000. (a)Shs.25,000 plus 30% of the amount by which chargeable income exceeds Shs.410,000
(b)Where the chargeable income of an individual exceeds Shs. 10,000,000 an additional 10% charged on the amount
by which chargeable income exceeds Shs. 10,000,000.

Taxation of Employment Income will include any benefits and allowances received by an employee, for instance;
Illustration 1
Acul Ocolo is employed as a security guard in Karacen (U) Ltd. He earns a monthly salary of Shs 225,000.
Is Karacen (U) Ltd obliged to deduct PAYE tax from Acul Ocolo? No, because Acul Ocolo’s monthly salary is less than the threshold so his salary does not attract PAYE.
Illustration 2
Acul Ocolo is an employee of company Y. He earns the following monthly income: a salary of Shs 300,000;travelling allowance of Shs 50,000 and medical allowance of Shs 30,000.
Compute his monthly PAYE tax liability.

Employment Income:
Salary 300,000
Travelling allowance 50,000
Medical allowance 30,000
Total 380,000

this Exceeding Shs 335,000 therefore Shs 10,000 plus 20% of the amount by which chargeable income exceeds 335,000.
Step 1
Shs 380,000-335,000....................................................45,000
Step 2
20% ×45,000.................................................................9,000
Step 3
9,000 +10,000 ..............................................................19,000
PAYE.............................................................................19,000
Uganda Revenue Authority (URA)

Registering a Business Name
1. Search for business Name with URSB at UGX 2,000
2. Reserve business Name with URSB at UGX20,000
3.Pay Registration fees of 50,000 if startup capital is less than 4. 5m and 1% f startup capital if the startup capital exceeds 5m. Additional Stamp duty of 0.5% the startup (share) capital will be paid for capital above 5m
5. Obtain Certificate of Incorporation from URSB
6. Obtain a TIN (Tax Identification Number)from URA
7. Obtain a trade License from KCCA;the amount depends on type or nature of business
8. If employing 5 or more people, register with NSSF as well.
Uganda Revenue Authority (URA) Uganda Registration Services Bureau NSSF Uganda Kampala Capital City Authority - KCCA

Your 2020 resolution this year may be to purchase land, have you created a due diligence checklist? Here are a few tips to start with.
1. Obtain a copy of land title for the said land
2. Conduct a search with the relevant land registry in the area you intend to purchase the land
3. Inquire about actual ownership from the tenants around especially when dealing with brokers
4. Ascertain if there are any Kibanja holders on the land
5. Confirm that the boundaries are as indicated in the title.
Ministry of Lands, Housing Uganda Land Alliance Uganda Land Commission

Requirements for sale of Mortgaged property
Article by ENSafrica

A recent Ugandan High Court decision, Sendagire Stephen and Nanyombi Gladys v DFCU Limited, Kabiito Karamagi and Kirumira Godfrey Kalule HCCS No. 26 of 2008, has set out good practice requirements for a mortgagee in exercising their right to sell mortgaged land upon default by a mortgagor.

The plaintiffs borrowed money from the defendant bank, against a mortgage over property developed with a school (the “mortgaged property”). The plaintiffs defaulted and the defendant bank appointed a receiver to recover the loan. The property was advertised for sale and eventually sold to the third defendant.

In deciding whether the suit property was lawfully sold, the judge held that the relationship between a bank and customer was one of close proximity based on trust and confidence and premised on a duty of care and mutual benefit. As such, there are common rules to be applied to safeguard the interests of both parties in this relationship. The right of the mortgagee to sell the mortgaged property is not absolute; it is caveated by the duty to exercise care as follows:

1. The mortgagee must not act in secret and should also obtain the best price and act in good faith. The judge held that since there was an underlying duty of care between the parties, the receiver entrusted with the sale of the mortgaged property should have documented the sale. In this case there was no documentary proof of all the bids received and how the whole sale process was conducted. The sale was conducted privately and the mortgagor was informed of the sale long after it had taken place.

2. The mortgagee must value the property before sale to establish the current market value and forced sale value and obtain the best price. The mortgagee must not sell the mortgaged property under the forced sale value or at an undervalued price. The Court held that even where the bids received are low, the mortgagee has a right to sell at any price, bearing in mind that it should be the best price. In this case, selling the mortgaged property below the forced sale value and far below its market value was a negligent act and the mortgagor was entitled to recover the difference between the true market value of the property and the sale price realised from the sale.

We expect this particular guidance from the Court to be problematic to selling mortgagees as it departs from the established principles of law in this area. The common requirement is for the mortgagee to take all measures to obtain the true market value of the mortgaged property at the date on which he decides to sell it. The courts have hitherto not prescribed a minimum price.

3. The sale of the mortgaged property should be advertised after the mortgagor has been notified. The receiver had notified the plaintiffs of his appointment as receiver and of the intention to sell the mortgaged property. The receiver also notified the plaintiffs of the sale by public auction and additionally advertised the sale in a local newspaper. The Court held that the Receiver had complied with this rule.

4. Public auction is competitive and more transparent and if a sale by private treaty is used, the best price and involvement of the mortgagor is preferable, especially access to information. The terms of appointment of the receiver had clearly stated that the sale of the mortgaged property would be by public auction and that no sale would be conducted by private treaty without the prior consent of the defendant bank. The proceeds of the sale were to be remitted to the defendant bank directly. The court faulted the receiver for selling the mortgaged property to the third defendant by private treaty without the consent of the defendant bank as no evidence was adduced to prove that the sale was conducted through a competitive bidding process. The receiver was also faulted for personally receiving the proceeds of the sale.

5. The sale of the mortgaged property under the Mortgage Act, does not include the sale of the movable properties thereon. The court faulted the third defendant for taking possession of the movable property found on the mortgaged property. The mortgaged property was a school with moveable property, including furniture and livestock, which were wrongfully retained by the third defendant.

Sale by mortgagee is the most common means of debt recovery in Uganda. It is therefore important that the mortgagee and all the parties involved in a sale get it right from the outset. This decision is significant as it provides guidance for parties to safeguard themselves against liability through emphasizing good faith, transparency and involvement of the mortgagor in every step of the sale.

Did You Know that a land title is a living document and therefore laminating your land title "kills" it? You will then have to make an application to the Land Registry for a Special Title as replacement.