Value Added Tax (VAT) is the main indirect tax in Uganda. It’s a tax on consumer expenditure and is collected on business transactions and imports.
This tax on consumption is applied during the production and distribution process to most goods and services. It’s also applied to goods, and certain services, entering the country. Although VAT is ultimately borne by the consumer by being included in the price paid, the responsibility for charging, collecting, and paying it to the tax authority at each stage of the process rests with the business making the supply, i.e., the seller.
A business registered for the tax will charge VAT (output tax) on its sales and incur VAT (input tax) on its purchases (including any VAT paid at importation). The difference between the output tax and the deductible input tax in each accounting period will be the amount of VAT payable by the business to the tax authority. Where the input tax exceeds the output tax, a refund can be claimed.
A transaction is within the scope of Uganda VAT if it subscribes to any of the below:
For these purposes, a taxable person is a person or entity who is registered for VAT in Uganda, or who is required to have been registered in Uganda.
There are two rates of VAT in Uganda. The standard rate – 18% and the zero rate. In addition, some goods and services are exempted from the tax.
Input tax credit is allowed if the VAT is incurred in the course or furtherance of the business. Input tax credit incurred on taxpayers who solely deal in the supply of exempt items is not allowed.
Importers of services in the country will incur VAT at import on the services being imported (if such services are not exempt). The importer of such services is required to self-charge and account for the VAT to the tax authority. The VAT incurred on importation of services into Uganda is not allowed as credit to the importer (except in a few categories). It is therefore a real cost to the importer.
A ‘person’ who either makes or intends to make taxable supplies of goods or services in the course or furtherance of a business must register for VAT if the value of its taxable supplies in Uganda exceeds the annual registration limit or is expected to exceed the limit in the near future. A business can register on a voluntary basis even if the registration limit has not been exceeded.
There is no group registration in Uganda.
A penalty may be imposed by the tax authority if a business fails to register at the correct time.
Yes, whether a business is established in Uganda or not, registration is based on taxable turnover made in Uganda.
The VAT Act denotes that a supply of services shall take place in Uganda if the recipient of the supply is not a taxable person, and the services are electronic services delivered to a person in Uganda at the time of supply.
The definition of electronic services includes:
• websites, web-hosting or remote maintenance of programs and equipment
• software and the updating of software
• images, text, and information
• access to databases
• self-education packages
• music, films, and games including games of chance
• political, cultural, artistic, sporting, scientific and other broadcasts and events including television.
No, a non-established business is not under obligation to appoint a representative in Uganda to register.
VAT returns normally cover a tax period of one calendar month. All VAT returns must be submitted within 15 days after the end of the tax period (month). All returns are required to be submitted electronically. The taxable person may apply for an extension of time to file the return and the tax authority may approve the extension where good cause for the delay is shown.
A special consideration is accorded to business which supplies the following services to non-taxable persons in Uganda.
• Services in connection with immovable property
• Radio or television broadcasting services received at an address in Uganda
• Electronic services delivered to a person in Uganda
• Transfer, assignment, or grant of a right to use a copyright, patent, trademark, or similar right in Uganda
• Telecommunication services initiated by a person in Uganda other than a supply initiated by a supplier of telecommunication services or a person who is roaming while temporarily in Uganda
The taxable person providing the above supplies are required to lodge a return with URA within fifteen (15) days after the end of three (3) consecutive months
A late VAT return submission will see a penalty of 2% per month compounded or US$55, whichever is higher. Late payment of tax will also see interest at 2% per month compounded.
There may be a request from the tax authority for a return of information, as and when the tax authority deems it necessary.
Yes. There are penalties when a return of information is not provided within the timelines prescribed by the tax authority, as well penalties for information deemed misleading.
No, VAT incurred outside Uganda cannot be claimed in Uganda.
The electronic VAT invoice must show:
A. Seller’s details
• VAT registration number and Taxpayer Identification Number (TIN)
• Name and address of the seller
B. URA information
• Date of issue of the invoice
• Device number from which the invoice was issued
• Fiscal Document number
C. Buyer’s details
• Taxpayer Identification Number (TIN)
• Name of the buyer
D. Details of goods and services
• Details of item sold such as quantity, unit of measure, and unit price
The VAT regime in Uganda is currently aligned with the EFRIS (Electronic Receipting and Invoicing System). Through this system, the Uganda Revenue Authority (URA) requires all invoices and receipts issued by taxpayers to get channeled through the same.
For further information on indirect tax in Uganda please contact:
Anil Patel
T +256 200 907 333/+256 414 535 145/+256 312 266 850
E taxconsulting@ug.gt.com
Indirect tax snapshot