Defining Ultimate Beneficial Ownership (UBO)

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Globally, there is a shift in focus towards facilitating fair distribution of tax revenues, especially with the wide tax treaty networks entered between countries to mitigate double taxation.

This is in addition to increasing awareness of the need to curb money laundering and financing of terrorism from the proceeds of illicit activities.

All these, among other justifications, have resulted into increased scrutiny on the phenomenon of Ultimate Beneficial Ownership (UBO).

Beneficial Ownership is about individuals who directly or indirectly control or own a company. From Uganda’s point of view, according to provisions in the Income Tax Act, the Ultimate Beneficial Owner is one who has full and unrestricted ability to enjoy that income and determine its future use.

This leaves a lot of room for subjectivity in terms of the documentation / qualifying characteristics to be met in satisfying this criterion.

In Kenya, The Companies (Beneficial Ownership Information) Regulations were issued in February 2020 which should have remedied this quagmire for the most part by providing clarity on expectations from all interested parties.

Taking the current provisions of the law into consideration, it is critical to exhaustively outline the parameters that need to be fulfilled in determining whether one qualifies as Ultimate Beneficial Owner from Uganda’s perspective, as we vie to create tax certainty and attract more Foreign Direct Investments (FDI).

Written by

Edgar Mukasa

Edgar is an Associate Director in KPMG Uganda with over 13 years experience working as a tax advisor in KPMG.

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