cereals grown, milled or produced in Uganda;
seed, fertilisers, pesticides and hoes;
milk, including milk treated in any manner to preserve it;
machinery, tools and implements suitable for use only in agriculture; and
leased aircraft, aircraft engines, spare parts for aircraft and aircraft maintenance equipment.
A supplier may claim input tax on these items.
Input tax allowed
Generally, VAT is deductible on taxable supplies made to the taxable person during the tax period and on all imports of goods and services made by that person if they are directly related to taxable transactions of the taxable person.
VAT is not deductible on taxable supplies made to the taxable person and on imports of goods or services made by that person if they are not for use in the business of the taxable person (for example where the goods and services are directly related to exempt, without-credit, transactions).
Input tax expressly denied
VAT incurred on the following supplies is specifically denied an input tax deduction:
goods or services acquired for purposes of entertainment (which is defined to mean the provision of food, beverages, tobacco, accommodation, amusement, recreation or hospitality of any kind), unless the taxable person is in the business of providing entertainment, or supplies meals or
refreshments to his employees in premises operated by him, or on his behalf solely for the benefit of his employees; or
a passenger automobile, and the repair and maintenance of that automobile, including spare parts, except in the case of motor dealers or rental businesses; and
telephone services to the extent of 10% of the input tax on those services.
Where goods or services are acquired only partially for purposes of taxable supplies, the taxable person can only claim a proportion of the VAT incurred on purchases during the tax period according to an apportionment formula where:
the numerator is the total amount of taxable supplies in the tax period; and
the denominator is the total amount of all supplies in the tax period (other than the supply of goods as part of the transfer of a business as a going concern).
If the apportionment percentage is less than 5%, no input tax may be credited for the period. If it is more than 95%, the full amount of input tax may be credited for the period.
The Standard Alternative Method (or the Direct Attribution Method) allows a person directly to attribute input tax separately to the exempt and taxable supplies and to claim for all the input tax related to the taxable supplies and for none of the input tax related to exempt supplies. The balance of input tax that cannot be directly attributed can be apportioned according to a given formula. This method, or any other method, may be used only with the approval of the Commissioner- General.
Preregistration and post- deregistration VAT
VAT incurred prior to the registration as a taxable person can be recovered in respect of taxable supplies where the supply or import was for use in the business of the taxable person, provided the goods are on hand at the date of registration and the supply or import occurred not more than six months prior to the date of registration.
A taxable person whose registration has been cancelled is regarded as having made a taxable supply of all goods on hand, including capital goods, and shall be liable for output tax on all the goods on which he received input tax credit. The output tax payable shall be based on the fair market value of the goods at the time of cancellation of registration.
VAT on imports is payable on the date the imports are cleared under the Customs clearance procedures. The taxable value is the total of:
the value of the goods for customs duty purposes (cost, insurance and freight (CIF), packing costs, selling commission, royalty or licence fees) and the value of any other services excluded from the customs duty value; and
the amount of customs duty, excise tax and any other fiscal charge payable (other than VAT).
Uganda is a signatory to the World Trade Organisation (WTO) agreement. The URA uses the valuation method of the WTO General Agreement on Tariffs and Trade (GATT), namely the Transaction Value Method. The importer must produce documents for the transactions relating to the imports, and the values contained therein are used to determine the customs value.