VAT was introduced in Uganda with effect from 1 July 1996 to replace sales tax. VAT is charged in terms of the Value added tax Act, Cap 349.
The VAT system is administered by the Uganda Revenue Authority (URA), the head of which is the Commissioner- General.
Rates and scope
The standard rate of 18% applies to all supplies that do not qualify for an exemption except for the supply of residential dwelling units, which are taxable at a rate of 5%. There is no higher or reduced VAT rate, except for the zero rate.
The following transactions are subject to VAT:
taxable supplies of goods or services made in Uganda by a taxable person; and
importation of goods (other than an exempt import) or services by any person.
The registration threshold for domestic supplies is UGX50 million.
Any person being a national, regional, local or public authority or body which carries on taxable activities may voluntarily register without regard to the threshold requirement of UGX50 million.
Applications for registration for VAT must be made by all persons carrying on existing business activities whose
annual taxable turnover exceeds or is expected to exceed UGX50 million in a 12-month period or UGX12.5 million in a three-month period.
A person who fails to register is liable for a penalty equal to double the amount of tax payable during the period that no application for registration is filed, or that registration by the Commissioner-General has not yet taken place.
Persons carrying on a taxable activity whose expected turnover is below the annual registration threshold (UGX50 million) may register voluntarily.
Application may be made for registration under the Investment Trader Status scheme, before taxable supplies are made. This is allowed for a period of four years, renewable for another period of four years, and enables a person to claim VAT in respect of expenditure on inputs relating to the planned taxable business activities.
Group or branch registration
Separate registration is needed for the different entities in a business group, as group registration is not provided for in the law.
In addition, the law does not provide for registration of separate branches or divisions.
A nonresident individual must have a nominated person in Uganda for VAT purposes. Though the VAT Act provides that a nonresident person who supplies services in Uganda for consideration would be considered as a taxable person, there is currently no registration procedure in place for a nonresident.
Application for registration
In order to apply for VAT registration, one first has to obtain a Tax Identification Number (TIN) and an income tax file number. The application for VAT registration (both compulsory and voluntary registration) must be made on form VAT 101, ‘Application for VAT Registration’ (which may be obtained from any local URA office). A visit is normally conducted by an URA officer. Once registered, the Commissioner-General provides a registration number and issues a VAT registration certificate, indicating the number and the effective date of registration. If registration is denied, the applicant is notified accordingly.
The format of the VAT registration number is: 1 2 3 4 5 _ X
A taxable person may apply in writing to have his registration cancelled in the following circumstances:
cessation to make supplies of goods or services for consideration as part of the business activities of the person; or
if in the most recent period of three calendar months, the value of the taxable supplies exclusive of VAT does not exceed 25% of the annual registration threshold of UGX50 million. In addition, the value of the taxable supplies exclusive of VAT for the previous twelve calendar months should not have exceeded 75% of the annual registration threshold.
A voluntarily registered taxable person (with a turnover below the annual registration threshold) may apply for deregistration after the expiration of two years from the date of registration. The Commissioner-General may cancel the registration of a voluntarily registered taxable person where the person: