URA asks companies earning Shs500m annually to submit audited books 

Uganda Revenue Authority (URA) has rolled out new income tax compliance measures that will require businesses with an annual turnover of Shs500m and above to submit audited financial statements, together with their tax returns.
The submitted documents, according to URA guidelines, will have to be prepared by an accountant licensed by the Institute of Certified Public Accountants of Uganda. They are part of the measures that seek to promote transparency and ensure accurate financial reporting, which is key in assessing taxes.
“This change took effect on September 1, 2024 and will apply to both original and amended tax returns for the following categories; final income tax returns for non-individuals, final income tax returns for individuals, and final income tax returns for partnerships,” URA noted in a notice, further indicating that “all taxpayers preparing to submit their final income tax returns for the year of ended June 30, 2024, which are due by December 31, 2024, are expected to comply with this requirement”.
The new measures are expected to give URA more leverage to bolster taxpayer compliance through real-time audits, according to PwC, a business, tax, audit and advisory firm, which said in a notice that this is part of the Domestic Compliance Improvement Plan for the 2024/25 financial year designed to address financial compliance risks and optimise revenue mobilisation.
The Domestic Compliance Improvement Plan seeks to facilitate accurate tax declarations and reduce the burden of additional tax, interest, and penalties for taxpayers resulting from misreporting on trade receivables, non-compliance with digital tax stamps, value-added tax registration, pay as you earn declarations and unutilised credit.
PwC also noted that taxpayers will receive regular notices, known as Real-Time Advisories, based on URA’s review of their transactions, highlighting potential compliance issues and offer guidance on how to address them, which will help businesses to minimise tax liabilities and ensure compliance.
PwC also noted that URA had indicated that the Domestic Compliance Improvement Plan will facilitate taxpayers to access tax clearance certificates and authorised economic operator status, as well as other tax exemptions, which in turn shall help URA to easily detect non-compliance and be in a better position to scrutinise profit-shifting or tax minimisation strategies.
The measures have been internationally adopted because of their effectiveness, which enhances investor confidence and positions Uganda to tap into global frameworks such as the Organisation for Economic Co-operation and Development’s Base Erosion and Profit Shifting initiatives, which seek to tackle tax avoidance at a global scale.
However, under the new measures, URA is expected to experience a short-term increase in workload related to verifying financial statements, conducting risk-based audits, and addressing discrepancies, which might require government to allocate the agency more resources or upgrade systems to handle the increased volume of submissions.
While the cost of compliance is a concern, businesses will benefit from improved financial discipline and governance structures.
Businesses will also benefit from ensuring the robustness of internal accounting practices that align with best practices and are valuable in securing credit, attracting investors, and building stakeholder confidence.
However, firms that have previously relied on underreporting income might now face higher tax liabilities, affecting cash flow and financial planning, which could particularly affect liquidity for some firms with thin profit margins, but in the long run, this could accelerate digitisation of financial reporting, which in turn, could facilitate smoother interactions with URA.
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