From the General Ledger to the Income Tax Return: A Case for Standardizing Charts of Accounts in Uganda

Every year, taxpayers invest considerable time and resources in maintaining accounting records, preparing financial statements, undertaking statutory audits and filing annual income tax returns. Yet, even after their financial statements have been audited, many taxpayers still experience significant difficulties completing their income tax returns.

One of the recurring challenges is reconciling the figures reported in audited financial statements with the disclosure fields prescribed in the income tax return. A taxpayer may maintain a complete general ledger, prepare a balanced trial balance and produce audited financial statements in accordance with International Financial Reporting Standards (IFRS), but still encounter considerable difficulties when populating the income tax return.

Why does this happen?

In many cases, the problem arises because the classifications and naming conventions used in the taxpayer’s chart of accounts do not correspond sufficiently with the information required in the income tax return.

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