Meaning of Tax Clearance
Tax clearance is a process initiated by the tax payer to the Uganda Revenue authority Commissioner to be certified as being compliant with their tax obligations with URA. Upon application, the applicant receives a tax clearance certificate (TCC) confirming that their tax related affairs are in order at the date of issuance of the tax clearance.URA uses this as a tool to compel tax payers to comply with provisions of tax registration, filing of returns and payment of assessed taxes. Ideally, a TCC confirms to the third party that the business entity they are dealing with is tax compliant.Several government departments specifically require presentation of a tax clearance certificates before being cleared for business purposes. The Ministry of Energy for example does not issue a licence to any mineral right applicant without confirmation that the applicant has been cleared as tax compliant. The Immigration department also requires a tax clearance certificate of the sponsoring organisation before issuing an applicant with a work permit.
Who needs a Tax clearance Certificate (TCC)
Besides business entities that apply for tax clearance as evidence of their compliance, the following tax payers/instances are by law required to obtain tax clearances. These include among others: –
- Providers of passenger transport services
- Providers of freight/transport services using a goods vehicle
- Providers of warehousing or clearing and forwarding services
- Suppliers of goods or services to a ministry Department or Agency of Government.
- A person transferring funds more than 2500 currency points or Ugx 50,000,000/= (Fifty million) from Uganda to a place outside Uganda.
- A foreign supplier/contractor/employee seeking to obtain a work permit from Ministry of internal affairs.
Requirements for issuance of a Tax Clearance Certificate
There are majorly two requirements that the URA official who is assigned an application to process a tax clearance will look out for namely; Proof of Registration with URA and proof of tax compliance.
Types of Tax clearance certificates issued by URA
Under the current Uganda Revenue authority tax administration regime, there are two certificates issued namely; the Annual Tax Clearance certificate and the Transactional Tax clearance certificate.The Annual Tax clearance is issued once a year to tax payers who comply with their assessed tax obligations and have been monitored for not less than three years.The Transactional Tax clearance on the other hand is issued to the tax payer upon application and if the URA officer is satisfied that the applicant tax payer is complying with its obligations. This TCC is addressed to a particular entity to enable processing of requirements. Upon submission of such TCC to the indicated addressee, the same is deemed expired.
Steps for processing a tax clearance on the URA Portal
Step 1
Go to URA Portal and log in using the TIN and password(Please note that no tax payer can obtain a tax clearance without having registered for taxes and obtained a Tax Identification number otherwise popularly referred to as TIN).
Step 2
Under e-services select tax clearance and click on it.
Step 3
Select transactional TCC, answer test questions and input the TIN of the addressee.
Step 4
Select purpose of the TCC(The URA portal has a drop-down list of all possible purposes for which a TCC may be required and should the applicant find that the purpose for which they require a TCC is not included, the portal provides an option for the tax payer to provide a customised reason).
Step 5
Click on add and select the period(When you click on add, the portal adds the addressee of the TCC and allows you input the period for which you require clearance. This period must be aligned to the URA accounting period).Step 6Submit for consideration by a system selected URA official who will handle the said request within about the maximum of 4 days.
Concluding remarks
Securing a tax clearance is more than just a compliance exercise—it is a vital step towards building financial credibility and ensuring smooth business or personal transactions. Ultimately, tax clearance is a reflection of transparency and responsibility, strengthening your standing with tax authorities, business partners, and financial institutions alike.
