Business 28 May 2026 Daily Monitor (Uganda)
Uganda Bolsters Transfer Pricing Rules to Combat Tax Avoidance
Recent parliamentary amendments to Uganda's Income Tax Act will significantly increase scrutiny on transfer pricing, shifting the burden of proof to taxpayers. Once enacted, companies must provide robust documentation demonstrating that related-party transactions reflect market value. Source: https://www.monitor.co.ug/uganda/oped/commentary/tightening-the-grip-on-transfer-pricing-5476160
Uganda’s tax landscape is set for a significant shift with Parliament’s recent approval of Clause 9 of the Income Tax (Amendment) Bill, 2026. This amendment, awaiting presidential assent, aims to enhance the Uganda Revenue Authority’s (URA) ability to combat tax avoidance by demanding greater transparency in cross-border and significant local related-party transactions.
Previously, the onus was largely on the URA to prove that transfer prices did not align with economic realities. However, the new legislation will require taxpayers, including local groups with transactions exceeding Shs500 million annually, to proactively demonstrate the commercial justification and arm’s-length nature of their related-party dealings. This moves transfer pricing from a year-end compliance task to an ongoing operational and governance consideration.
Companies will need to maintain detailed documentation encompassing the entire value chain of related-party transactions. This includes accounting records, cost allocation methods, and evidence of actual conduct, all meticulously supported by reliable proof. The URA expects audits to become more rigorous, evidence-based, and focused on the commercial substance of transactions.
Failure to provide adequate documentation when requested will heighten the risk of disputes. Generic group-level transfer pricing files will no longer suffice; local substantiation connecting legal agreements, accounting treatment, and operational reality will be critical. Accounting consistency, with financial statements, will also face closer scrutiny.
Ultimately, transfer pricing disputes will hinge on credibility and the ability to present a coherent, evidence-based explanation of how related-party arrangements function. This evolution aligns Uganda with international standards and signals increased financial and reputational risk for businesses that neglect this area.
Source: https://www.monitor.co.ug/uganda/oped/commentary/tightening-the-grip-on-transfer-pricing-5476160