Regulatory compliance during the course of your business:
Last week, we discussed the regulatory and compliance requirements right after registration of your business. This week, we discuss the regulatory and compliance requirements during the course of your business. Today’s discussion will focus on companies.
File annual returns with the Registrar of Companies:
Annual returns are a report to the Registrar of Companies about the status of your company: whether there has been a change in ownership of shares or directorship or membership of the company, or location of the company, or registered debts of the company, etc.
Annual returns must be filed every year. A company that has just been registered is exempted from filing annual returns for that particular year of its incorporation, but must start filing returns in the next year. These returns are filed at any URSB branch.
It is an offence under the law to omit to file annual returns when they are due. In case of default, the directors or officers of the company who are in default could be condemned to pay a heavy fine. Moreover, you cannot file anything else with the Registrar of Companies unless your company has duly filed all its returns until the current year.
If your company fails to file annual returns for the next 5 years after its registration, the registrar could strike the company off the register. This means that your company will cease to exist.
If your company is dormant, you must file a resolution indicating this dormancy and request the Registrar to exempt your company from filing annual returns for the next 12 months- this is the only grace period provided for under the law.
P. S: Annual returns are not to be confused with tax returns, which are filed separately with the Uganda Revenue Authority (URA).
Pay your taxes and file tax returns:
Whether you have a sole proprietorship or a partnership or a company, you must pay all the taxes your business is liable to pay in the specified time frames. URA has enforcement agents who are tasked with going around to inspect businesses and give a report about their status and whether or not they are tax compliant.
It is important that you approach a tax consultant or accountant to advise you on what taxes you are liable to pay in your line of business and in what timeframe to pay.
On top of paying the taxes, you must periodically file tax returns within a specified timeframe. Tax returns are a report to URA on the income status of your business: how much income the business and its employees are earning, the assets and liabilities, profits and losses of the company, and how much is to be paid in taxes, etc.
Your accountant will file your tax returns for you.
NSSF contributions:
The law requires that every employer in Uganda who employs 5 employees or more MUST register their company or organisation and its employees with the National Social Security Fund (NSSF) and make contributions on their behalf.
On the other hand, the employees who are eligible to make contributions to NSSF are those between the ages of 16 (as long as they are not employed under an apprenticeship/internship program) and 55 years old who ordinarily live and work in Uganda on full-time employment.
Please note that there are employees who may not be required to make contributions during certain periods of their employment. Visit the NSSF website on www.nssfug.org for further information about which of your employees are eligible to contribute to NSSF. Otherwise, consult your lawyer to advise you on the same.
The contributions an employer is expected to make to NSSF include the following:
i. Employer’s standard contribution: The employer must pay to NSSF a total of 15% of the wages of each employee for any given period of payment. This is shared between the employer and the employee, whereby each employee contributes 5% of his/her total wages for any particular period of payment and the employer contributes, on behalf of each employee, 10% of that employee’s total wages for any particular period of payment.
ii. Employer’s special contribution: For your employees who are above 55 years old, and those who do not ordinarily live in Uganda but work for your company in Uganda- whether or not they are registered with NSSF- the employer must make a special contribution of 10% of that employee’s total wages for certain specified periods.
P. S: the law currently provides that you must pay income tax on any contributions to be remitted to NSSF. Approach your tax consultant about the amount to be paid in income tax.
There are time limits for making NSSF contributions. In our typical end-of-month-salary payment scheme, employers are required to remit the contributions to NSSF before the 15th day of every month. In any case, you are expected to remit the contributions for each employee within 15 days after they have been paid their wages.
There are also penalties for failure to remit any NSSF contributions that you are liable to pay within the specified times. These penalties apply incrementally for every 15 days of default or delay of payment in a month.
It is advisable to retain the services of an accountant to advise you on the amount to be remitted for each employee.
As always, look out for the next part of these series next week.
Kokunda Patience- Associate Partner, lawgic Advocates