Denis Kakembo

Tax and energy lawyer

[Denis Kakembo @deniskakembo]

When Deemed Disposals Produce an Unequal Tax Outcome in Uganda

Uganda’s income tax regime contains clear rules for computing capital gains on domestic share sales. Ordinarily, the tax is computed on the gain realised by the person who disposes of the shares.

The deemed disposal rules pursue a legitimate objective. Offshore transactions should not escape Ugandan tax where the value transferred is substantially derived from assets or businesses situated in Uganda. The difficulty is that their current application can produce a tax result that is materially different from, and significantly higher than, the result under the ordinary capital gains framework.

This is evident where a foreign shareholder directly sells shares in a Ugandan company and the transfer is registered with URSB. The shareholder makes the disposal and receives the consideration. The Ugandan company does neither. Yet the deemed disposal provisions are applied as though the company itself had disposed of its assets, thereby placing the resulting tax liability on the company. A more workable approach may be to treat the Ugandan company as a collection agent for the exiting shareholder, rather than as the taxpayer. This would allow the parties to identify, withhold and account for the tax as part of the transaction structure, while placing the economic burden on the person who made the disposal and received the proceeds.

The concern extends beyond the identity of the taxpayer. Under the formula prescribed by the Tax Appeals Tribunal, the resulting liability may be even greater for highly leveraged companies, notwithstanding that their equity value is reduced by debt. The law is also unclear on how reliefs ordinarily available in capital gains transactions, including inflationary relief, rollover relief and intra-group reorganisation relief apply to a deemed disposal transactions.

Uganda’s deemed disposal provisions therefore require careful refinement. The objective should remain the protection of Uganda’s tax base, but the rules should produce outcomes that are consistent, proportionate and aligned with the economic value transferred and the commercial substance of the transaction.

[Denis Kakembo @deniskakembo]

https://t.co/7NvkhgZ55q

Uganda’s Deemed Disposal Tax Rules: When the Same Law Produces Different Answers

We recently represented KFC Uganda in this matter. Although the Tribunal did not determine every issue as we had advanced, it nevertheless set aside the principal assessment.

The underlying policy objective is legitimate. Developing countries should be able to tax offshore transactions where the value realised from an overseas sale is substantially derived from operating assets within their jurisdictions. The difficulty lies in Uganda’s deemed disposal provisions, which remain too sparse to provide clear, predictable and commercially workable guidance.

The Tax Appeals Tribunal has attempted to bridge that gap by prescribing a formula. While this provides some direction, it does not resolve the uncertainty, and we retain serious reservations about its commercial application, particularly in leveraged transactions.The divergence between the Uganda Revenue Authority and the Office of the Attorney General further illustrates the problem. The Attorney General has questioned the applicability of the provisions, while URA has sought to enforce them robustly. Where taxpayers, advisers, the Attorney General, URA and the Tribunal consider the same provisions and reach materially different conclusions, the difficulty may lie not with the interpreters, but with the law itself.

Uganda’s deemed disposal rules therefore require urgent refinement. Their uncertain application risks undermining investment certainty, transaction planning and confidence in the tax system.We shall shortly issue a policy paper proposing practical amendments. We do not advocate repeal, but clearer rules that preserve the legitimate tax objective while ensuring certainty, fairness and commercial workability. We trust that Government and URA will give these proposals serious consideration so that revenue protection and business confidence advance together.

[Denis Kakembo @deniskakembo]

Writing in the NewVision Newspaper highlighting some of the tax challenges with regard to the taxation of the transfer of oil and gas licenses in Uganda.

https://t.co/ROxSmiThyL

[Denis Kakembo @deniskakembo]

This was hard fought!

[Denis Kakembo @deniskakembo]

Sending out flowers to @URSBHQ for going above and beyond to proactively facilitate the completion of a time-sensitive merger transaction we have been working on.

Deeply grateful to the DG @Mercykains, the Deputy DG, the Assistant Commissioner for Business Registrations Kule Walid, and Registrars Rachel Nalukwago and Charlotte Mudoola for the exceptional support.

This is public service at its best.

[Denis Kakembo @deniskakembo]

We are pleased to share that Cristal Advocates has been recognised by IFLR1000 in its 2025 survey as a Recommended Firm in both Finance & Corporate and Project Development.

We are also proud that our Partners, Denis Kakembo and Dickens Asiimwe Katta, have received individual recognition in their respective practice areas.

This acknowledgement reflects the trust of our clients, the dedication of our team, and our continued commitment to delivering practical, high-quality legal solutions. Thank you to our clients and colleagues for being part of this journey.

[Denis Kakembo @deniskakembo]

Uganda’s oil and gas sector has no sharper mind than Dickens Asiimwe Katta. His institutional insight and technical depth are simply unrivalled. I am a seasoned oil and gas practitioner, but when Dickens speaks, I sit back and enjoy. A distinction that truly speaks for itself. Very well deseved @ Dickens Assimwe Katta

[Denis Kakembo @deniskakembo]

I am deeply humbled to share that I have been recognized among notable legal practitioners in Uganda, together with Cristal Advocates, in the newly released IFLR1000 EMEA rankings. This acknowledgement is a gentle reminder of God’s grace and the trust that so many have placed in us along the way. I carry that trust with reverence.

My gratitude runs deep for every client, colleague, and institution that has allowed me to walk alongside them in their journeys. Your confidence in our work has shaped every step, and nothing about this moment would be possible without you.

I also hold a special place of thanks for my mentor, former boss, and enduring inspiration, Bill Page and for my former employer Deloitte. Those formative years were a gift. They poured into me with patience, wisdom, and belief long before I had earned it. I remain profoundly grateful for the foundation they helped build and for the doors they opened that continue to guide my path today. Thank you for standing with us through our moments of moments of need, naivety, innocence and vulnerability and for holding us steady when the path was still forming.

Thank you all for believing in us. I pray to honour that trust with integrity, diligence and a heart anchored in service.

[Denis Kakembo @deniskakembo]

Climate financing and carbon markets

[Denis Kakembo @deniskakembo]

Climate change and energy transition

[Denis Kakembo @deniskakembo]

This coming week

[Denis Kakembo @deniskakembo]

Not only traders, but nearly every taxpayer in Uganda today expresses concern about the country’s tax framework and administration. The push to meet revenue targets has increasingly tilted the system toward collection over fairness, raising unease about transparency, consistency, and trust. This trajectory is not sustainable.

[Denis Kakembo @deniskakembo]

Thanks Deogratius Wamala for highlighting our concerns around capital gains on offshore disposals. It would be unfortunate if the current approach to enforcement by government and the URA continues without careful reflection and consideration. A pause to reassess would serve the broader national interest. While the intent behind the law is understood and appreciated, its current implementation may not be achieving the intended balance. It places strain on taxpayers, risks undermining revenue integrity in the long term, and may affect Uganda’s credibility in the global business environment. Recognizing when a system needs adjustment is not a sign of weakness. It is a mark of responsible leadership. There is still an opportunity to strengthen the tax framework by revisiting areas that are not aligning with commercial realities. Doing so would lay the groundwork for a regime that is fair, predictable, and supportive of sustained economic growth.

[Denis Kakembo @deniskakembo]

Taxing shifts in company control in Uganda: The fragile framework of change in ownership rules https://t.co/6tLy4WsB76

[Denis Kakembo @deniskakembo]

Whether we agree or not, there is a challenge in the law regarding the taxation of change in company ownership, and for the good of the country, government is urged to take a step back and reflect on its application to ensure a win–win outcome for both the country and businesses.

[Denis Kakembo @deniskakembo]

Taking part in this Uganda Law Society event focusing on taxation a key area of my practice

[Denis Kakembo @deniskakembo]

Graduate Trainee Programme 2025

[Denis Kakembo @deniskakembo]

The pinch of high taxes on Ugandan employees. Writing in today's newvision