Introduction
Uganda offers a compelling investment landscape for foreign investors due to its political stability, legal and economic landscape, natural resources, strategic geographical location, etc. The unique benefits offered by Uganda include:
Strategic Location and Regional Integration: Uganda is a gateway to the East African Community, providing access to a market of over 283.7 million people. Regarding regional integration, Uganda scores very highly. It has taken tremendous strides aimed at reducing trade barriers, simplifying trade, harmonizing/reducing/removing tariffs, creating a single market, promoting preferential trade terms, and enhancing competitiveness while stimulating investment, innovation, and economic growth. As such, Uganda is a member of the East African Community(EAC), Common Market for Eastern and Southern Africa (COMESA), African Continental Free Trade Area (AfCFTA), Economic Partnership Agreements (EPA) with the European Union, etc. It also has Double Taxation Treaties/agreements with several countries.
Skilled Workforce: Uganda boasts a young, English-speaking workforce with a literacy rate above 76.5%.
Rich Natural Resources: The country has abundant fertile agricultural land, minerals, and freshwater bodies with the best weather.
Robust Economic Growth: Uganda has a growing economy with GDP growth rates consistently above the Sub-Saharan African average.
Favourable Investment Climate: The government actively promotes foreign investment with fiscal and tax incentives and free capital repatriation policies. It has even set up a one-stop business facilitation centre for investors.
This guide aims to provide foreign investors with a brief overview of the legal landscape for doing business in Uganda, covering everything from business structures to sector-specific restrictions. By understanding the unique benefits and potential sectors for investment, foreign investors can make informed decisions to optimize their operations in Uganda. Some of the best sectors to invest in include Agriculture, Tourism, ICT, Energy, Real Estate, and Healthcare.
Legal Framework for Foreign Investments
Key Legislation
The Investment Code Act
The Companies Act
The Uganda Revenue Authority Act
Uganda Citizenship and Immigration Control Act
Various sector-specific laws and regulations
Regulatory Bodies
Uganda Investment Authority (UIA)
Uganda Registration Services Bureau (URSB)
Uganda Revenue Authority (URA)
2. Business Structures for Foreign Investors
Sole Proprietorship
Legality: Open to foreign nationals
Liability: Unlimited
Registration: URSB, local government for trading Licence and URA for TIN
Partnerships
Legality: Open to foreign investors
Liability: Depends on the type of partnership—general or limited
Registration: Partnership deed required; register with URSB and obtain a TIN from URA
Limited Liability Company (LLC)
Legality: Open to foreign ownership
Liability: Limited to share capital
Registration: URSB for incorporation, URA for TIN, and local government for trading licenses
3. Employment and Immigration
Work Permits
Various classes exit depending on the nature of work and status of the applicant. The Relevant office is the Directorate of Citizenship and Immigration Control (DCIC). There are strict penalties for non-compliance
Employment Laws
Compliance with Ugandan labour laws and ensuring safe working conditions is mandatory.
4. Sectors with Limitations on Foreign Ownership
Some sectors require more than the average compliance. As such, the law imposes certain restrictions and requires specific conditions, including obtaining special Licences, local content inclusion, passing the fit and proper test for key business personnel, government co-ownership, share capital requirements, limits to leasehold interest only for land, etc. Some of these sectors include:
Telecommunications, Media and Broadcasting, Mining and Natural Resources, Financial Institutions, Real estate, Defense and Security, Public Infrastructure and Utilities, Agriculture, Aviation
5. Intellectual Property
URSB registers Trademarks, patents, industrial designs, copyrights, and other forms of Intellectual property. Uganda is a member of WIPO and a signatory to many treaties and protocols on intellectual property. Its regulatory framework is thus robust and quite up-to-date.
6. Taxation
All businesses must register and obtain a Tax Identification Number with URA under The Tax Procedures Code Act. Also, the Income Tax Act and The Value Added Tax Act prescribe rates for tax, i.e. corporation tax at 30% and VAT at 18%, respectively. There are several other tax-related laws, and professional advice is prudent.
7. Dispute Resolution
Uganda's courts follow the common-law system. Alternative Dispute Resolution (ADR) Mechanisms like Mediation, Conciliation, and arbitration are increasingly becoming popular.
Conclusion and Recommendations
Uganda is a superb market with numerous opportunities and is far from saturation. Are you an investor wondering where to go next? Look no further. Please note that the insights in this article are only a guide and should not substitute customized legal advice. Accordingly, I recommend:
1. Legal Counsel: Engage local experts familiar with Ugandan law.
2. Financial Planning: Consult tax advisors for tax structuring and planning.
3. Due Diligence: Thorough market research and risk assessment are always necessary.
Otherwise, welcome to Uganda! The Pearl of Africa!
Yours sincerely,
Damalie Tibugwisa
Managing Partner
TARA Advocates