Business 16 March 2026 Daily Monitor (Uganda)
Navigating Transfer Pricing Risks for Ugandan Businesses
As Ugandan firms expand globally, transfer pricing scrutiny by the Uganda Revenue Authority intensifies, with risks from mispricing, poor documentation, and unsubstantiated service charges. Proper planning and documentation are key to avoiding penalties and disputes. Source: https://www.monitor.co.ug/uganda/business/prosper/risks-of-transfer-pricing--5392438
Ugandan businesses engaging in cross-border or intra-group transactions face growing oversight from the Uganda Revenue Authority (URA) on transfer pricing. These rules, introduced in 2011 under the Income Tax Act, mandate that prices between related entities follow the arm’s length principle, mimicking deals between unrelated parties.
Common pitfalls include mispricing goods or services, such as a local subsidiary overpaying a foreign parent, which can lead URA to adjust taxable income and shift profits back to Uganda.
Another major issue is inadequate documentation. Taxpayers must detail transaction nature, agreements, and pricing methods. Without this, penalties up to Shs50 million may apply during audits.
Intra-group services like management fees often spark disputes if benefits to the local entity aren’t proven. URA probes whether services were delivered, beneficial, and market-rate.
Financing risks arise from non-market interest rates on related-party loans, potentially leading to deduction disallowances. Early planning during transaction setup, rather than post-audit, is crucial.
To manage risks, businesses should prepare comprehensive transfer pricing studies with functional analysis and benchmarking, ensure contracts align with operations, and cooperate promptly in audits. Engaging tax experts aids compliance in this blend of tax, economics, and business analysis.
Business leaders must view transfer pricing as a governance priority to sidestep costly issues amid rising URA focus on international payments.
Source: Daily Monitor (Uganda)