Value of supply
The taxable value of a taxable supply is the total consideration paid in money or kind by all persons for that supply.
‘Consideration’ in relation to a supply of goods or services, means the total amount in money or kind paid or payable for the supply by any person, directly or indirectly, including any duties, levies, fees and charges paid or payable on, or by reason of, the supply other than VAT, reduced by any discounts or rebates allowed and accounted for at the time of the supply.
The concepts ‘consideration’ and ‘value’ must be distinguished as follows:
value of the supply = amount payable inclusive of VAT;
consideration for the supply = amount payable exclusive of VAT.
The taxable value of:
a taxable supply of goods by way of an application for own use; or
a taxable supply for reduced consideration,
is the fair market value of the goods and services at the time the supply is made.
The taxable value of a taxable supply of goods under a rental agreement is the amount of the rental payments due or received.
Accounting basis and tax period
Under the invoice basis, VAT is accounted for by using the formula (X –
‘X’ is the total of the VAT payable in respect of taxable supplies (sales) made by the taxable person during
the tax period; and
‘Y’ is the total credit (on purchases) allowed to the taxable person in the tax period.
The cash basis applies to taxable persons whose annual taxable supplies do not exceed UGX200 million. Under this scheme the taxable person accounts for VAT on the actual cash receipts and payments.
Tax periods are periods of one calendar month.
Returns and payment of VAT
VAT returns must be made monthly, and filed within 15 days of the end of the tax period.
Taxpayers may register with the URA to carry out their tax formalities or procedures with the URA electronically, such as electronic filing of tax returns.
The VAT due must be paid within 15 days of the end of the tax period, i.e. when the return must be filed. A Bank Payment Advice form is obtainable from the URA. The form can be used to pay VAT in cash or by cheque into any URA account at the various banks.
Payments above UGX20 million have to be effected by electronic funds transfer.
Interest and penalties
The penalty for not filing a VAT return is the greater of UGX200,000 or the compounded interest rate of 2% per month for the period the return is outstanding. Penalty for late payment of VAT is calculated at a compound interest rate of 2% per month for the period during which the tax is unpaid.
If a person knowingly or recklessly makes a statement or declaration to an officer of the tax authority that is false
or misleading in a material manner and the resulting tax payable or refundable is different from the proper tax payable, the person is liable to pay double the amount of excess tax.
Further, a person who, during a tax period, claims a refund that is in excess of what is due, is liable to a penal tax equal to 100% of the excess.
For businesses that are in a regular repayment (zero-rated) position, cash refunds are made. Cash refunds can be made within one month following the due date or when the return was made.
For deserving taxpayers (large taxpayers), refunds can be made within 10 days of lodging the claim under the Customised Fast Track (CFT) system. Taxpayers are subject to preliminary evaluations on a case-by-case basis before they qualify for the CFT.
Where businesses are not in a regular repayment position, and the refund is:
less than UGX5 million: the refund will be offset against the next tax period’s liability; or
more than UGX5 million: the business can opt to offset the refund as described above, or get a cash refund.
Where the URA fails to make a refund within one month, the URA must pay interest at a rate of 2% per month compounded on the amount of the refund.
Objections and appeals
A person who is dissatisfied with an assessment may lodge an objection with the Commissioner-General within 45 days after receipt of the notice of the assessment decision.
Where a person is dissatisfied with