Kampala GMT
EY Street address: Mail address: Ernst & Young House P.O. Box 7215 18 Clement Hill Road Kampala Shimoni Office Village Uganda Kampala Uganda
Indirect tax contacts
Muhammed Ssempijja +256 (41) 434-3520/4 muhammed.ssempijja@ug.ey.com
Allan Mugisha +256 (41) 434-3520/4 allan.mugisha@ug.ey.com
Prosper Ahabwe +256 (41) 434-3520/4 prosper.ahabwe@ug.ey.com
Faith D. Kimono +256 (41) 434-3520/4 faith.kimono@ug.ey.com
A. At a glance
Name of the tax
Value-added tax (VAT)
Local name Value-added tax (VAT)
Date introduced 1 July 1996
Trading bloc membership Common Market for Eastern and Southern Africa (COMESA) East African Community (EAC) African Continental Free Trade Area (AfCFTA)
Administered by Uganda Revenue Authority (https://www.ura.go.ug) (URA)
VAT rates
Standard rate 18%
Others Zero-rated (0%) and exempt
VAT number format 10-digit numeric tax identification number in the form of 1234567890
VAT return periods
Monthly Thresholds
Registration Annual amount of UGX150 million (approx. USD40,000) or quarterly amount of UGX37.5 million (approx. USD10,000)
Recovery of VAT by non-established businesses No
B. Scope of the tax
VAT applies to the following transactions:
• Taxable supplies of goods and services made in Uganda by taxable persons
• Imports of goods other than exempt imports
• Supplies of imported services other than exempt services
C. Who is liable
The persons liable for VAT in Uganda vary according to the type of supply. The following persons are liable for VAT in Uganda:
• Taxable supply in Uganda: the taxable person making the supply
• Import of taxable goods: the importer
• Import of taxable services: the recipient of the services
The annual registration threshold is UGX150 million (approx. USD40,500).
A “taxable person” is defined in the Uganda VAT Law as someone that is registered or required to be registered for VAT in Uganda.
Exemption from registration. The VAT law in Uganda does not contain any provision for exemp tion from registration.
Voluntary registration and small businesses. The VAT law in Uganda contains a provision for application for voluntary registration of persons supplying goods or services for consideration. In exercising the discretion whether to grant the voluntary registration or not, the Commissioner General must be satisfied that the person has a fixed place of abode or business; will keep proper accounting records; will submit regular and reliable tax returns and that the person is a fit and proper person to be registered.
Group registration. Group VAT registration is not allowed in Uganda.
Non-established businesses. A “non-established business” is a business that does not have a fixed place of abode or business in Uganda. Non-established businesses are not liable to charge and account for VAT except where they provide specified electronic services delivered remotely to persons who are not taxable persons in Uganda at the time of supply.
Tax representatives. A tax representative is responsible for performing any duty or obligation imposed by the tax law on a taxable person, including the submission of returns and payment of tax. A tax representative making a payment of tax on behalf of the taxable person is treated as acting under the authority of the taxable person. Examples include:
• For an individual under legal disability, the guardian or manager
• For a company, the chief executive officer, managing director
• For a partnership any partner
• For a trust, a trustee of the trust
Tax representatives are therefore required to assist taxable persons who are not able to meet their tax compliance personally.
Reverse charge. Generally, the reverse-charge mechanism is not applicable except for the import of services made by a contractor or licensee in the petroleum or mining sector, or a person pro viding business process outsourcing services. VAT on imported services does not apply for any exempt service.
An import of a service is an exempt import if the service would be exempt had it been supplied in Uganda or would be used in the provision of an exempt supply. Therefore, reverse charge would also not be applicable on the import of a service that is an exempt import.
At the time of preparing this chapter, the Tax Appeals Tribunal had issued a ruling on the issue of reverse-charge VAT on imported services. This issue regarded whether the place of supply provi sion is applicable to the imported services provision. The Tribunal ruled that VAT is payable on imported services by all recipients, whether taxable or not, and this input tax is not claimable, unless the person is a licensee or a contractor in the petroleum or mining operations or is a person providing business process outsourcing services.
Domestic reverse charge. There are no domestic reverse charges in Uganda.
Digital economy. Nonresident providers of electronically supplied services for business-to-busi ness (B2B) supplies are not required to account and register for VAT in Uganda. Instead, the customer is required to self-account for the output tax via the reverse-charge mechanism. However, the output tax declared cannot be claimed as an input credit except if the importer of the services is a contractor or licensee in the petroleum or mining sector, or a person providing business process outsourcing services.
Nonresidents providing electronically supplied services for business-to-consumer (B2C) sup plies are not required to account and register for VAT in Uganda. Instead, the supply is treated as an imported service for which the individual customer is required to account for VAT via the reverse-charge mechanism. But in practice, no VAT is accounted for because there is no mecha nism for the individual to account for VAT, since it is not registered. However, the nonresident would be required to register and account for VAT on its B2C supplies if they are electronic services provided remotely (see the definition below) and if its supplies exceed the registration threshold. The registration requirement only applies for these types of services.
Online marketplaces and platforms. Electronic services when provided or delivered remotely to a person in Uganda, where the recipient is a nontaxable person, are supplied in Uganda and as such are taxable supplies in Uganda. Electronic services are defined to include websites, web hosting or remote maintenance of programs and equipment; software and updating of software; images, text and information; and self-education packages among others. The Revenue Authority has issued a Public Notice that such a person providing these services ought to apply for registration, file a return and account for VAT in Uganda. The return shall be filed within 15 days after the end of three consecutive calendar months. A nonresident person may appoint a tax represen tative for purposes of effecting the registration and filing requirements. The Commissioner General may, at the cost of a nonresident, appoint another person to prepare and furnish the return on behalf of that person.
Registration procedures. A person that is not already a registered person must apply to be regis tered in accordance with the VAT Act by the following dates:
• Within 20 days after the end of any period of 3 calendar months during which the person made taxable supplies, the value of which exclusive of any tax exceeded UGX37.5 million (approx. USD10,150)
• At the beginning of any period of three calendar months if reasonable grounds exist to expect that the total value of taxable supplies, exclusive of any tax, to be made by the person during the period will exceed UGX37.5 million (approx. USD10,150)
Applications for VAT registration are done on the URA portal (https://www.ura.go.ug/) using a form/template prescribed by the Commissioner General. A person who applies for registration is registered and issued a certificate of registration if the Commissioner General is satisfied that the person is eligible for registration under the VAT Act and has a fixed place of abode or business. The Commissioner General must also be satisfied that person:
• Will keep proper accounting records relating to any business activity
• Will submit regular and reliable tax returns
• Is a fit and proper person to be registered
Upon submitting the application for registration online, the applicant is required to submit the following physical documents to the URA offices:
• Tenancy agreement; this is required to show fixed place of business
• Invoices or contracts that show the applicant’s sales satisfy the VAT threshold of UGX37.5 million for three consecutive months or a contract whose stipulated value exceeds the annual or quarterly threshold
Applicants are also currently required to mandatorily register for the Electronic Fiscal Receipting and Invoicing System (EFRIS).
An inspection of the premises will be done by an officer from the URA and thereafter the appli cation is approved.
Registration for VAT takes an average of two working days from the date a complete application is submitted.
Deregistration. In the following circumstances, the VAT-registered person is required to apply for VAT deregistration by amending the taxable person’s tax identification number (TIN):
• If the taxable person has ceased to make supplies of goods or services for consideration as part of their business activities
• If, with respect to the most recent period of three calendar months, the value of taxable supplies exclusive of tax does not exceed UGX37.5 million and if the value of taxable supplies exclusive of tax for the previous 12 calendar months does not exceed UGX112.5 million
However, the Commissioner General may also initiate the cancellation of a person’s VAT registra tion if the Commissioner General is satisfied that any one of the following circumstances exist:
• The taxable person is neither required nor entitled to apply for VAT registration
• The taxable person has no fixed place of abode or business
• The taxable person has not kept proper accounting records relating to its business activity
• The taxable person has not submitted regular and reliable tax returns
• The taxable person is not, in the opinion of the Commissioner General, a fit and proper person to be registered
The Commissioner General is required to serve notice in writing on a taxable person of a deci sion to cancel or refuse to cancel registration within 14 days of making the decision. The cancel lation of registration takes effect from the end of the tax period in which the registration is canceled.
Deregistration does not affect the person’s obligations and liabilities while the person was still a taxable person under the VAT act, including the lodging of VAT returns and payments of any taxes due.
Changes to VAT registration details. Any changes made to VAT registration details are made on the profile of the company on the URA web portal, e.g., a change in the nature of the business.
D. Rates
The term “taxable supplies” refers to supplies of goods and services that are liable to a rate of VAT, including the zero-rate.
The VAT rates are:
• Standard rate: 18%
• Zero-rate: 0%
The standard rate of VAT applies to all supplies of goods or services unless a specific measure provides for the zero rate or an exemption.
Examples of supplies of goods and services taxable at 0%
• Exports of goods or services from Uganda
• International transport of goods or passengers and tickets for their transport
• Drugs, medicines and medical sundries manufactured in Uganda
• Educational materials
• Seeds, fertilizers, pesticides and hoes
• Sanitary towels and tampons and inputs for their manufacture
• Leased aircraft, aircraft engines, spare engines, spare parts for aircraft and aircraft maintenance equipment
• The supply of cereals grown and milled in Uganda
• The supply of handling services provided by the National Medical Stores in respect of medical supplies, funded by donors
The term “exempt supplies” refers to supplies of goods and services that are not liable to VAT and that do not qualify for input tax deduction.
Examples of exempt supplies of goods and services
• Livestock, unprocessed foodstuffs and unprocessed agricultural products except wheat grain
• Postage stamps
• Financial services
• Services related to health insurance, life insurance, micro insurance, reinsurance and aircraft insurance services
• Unimproved land
• Sale, letting or leasing immovable property, other than: Sale, lease or letting of commercial premises
Sale, lease or letting for parking or storing cars or other vehicles
Sale, lease or letting of hotel or holiday accommodation Sale, lease or letting for periods not exceeding three months Sale, lease or letting of service apartments
• Education services
• Veterinary, medical, dental and nursing services
• Imported drugs, medicines and medical sundries
• Social welfare services
• Betting, lotteries and games of chance
• Goods as part of a transfer of a business as a going concern by one taxable person to another taxable person
• Precious metals and other valuables to the Bank of Uganda for the State Treasury
• Passenger transportation services (other than tour and travel operators)
• Petroleum fuels subject to excise duty (motor spirit, kerosene and gas oil), spirit-type jet fuel, kerosene-type jet fuel and residual oils for use in thermal power generation to the national grid
• Dental, medical and veterinary goods, including: Dental, medical and veterinary equipment
Ambulances
Contraceptives of all forms
Maternity kits (mama kits)
Medical examination gloves
Medicated cotton wool
Mosquito nets, acaricides, insecticides and mosquito repellent devices
Diapers
Disposable medical face masks reusable face masks made of fabric
Medical boots
Medical impermeable aprons/coverall suits
Bouffant nonwoven surgical cap
Goggles, protective, indirect side ventilation
Infrared thermometers
Motorized fumigation pumps
Oxygen cylinders
Body bags
Biohazard bags, container, used sharps, leak proof
Disinfectants
Medical plastics or rubber gloves
Gas masks with mechanical parts
Disposable hair nets
Paper bedsheets
Raw materials and inputs for their manufacture
• Selected machinery, tools and implements suitable for use only in agriculture
• Crop extension services
• Animal feeds and premixes
• Irrigation works, sprinklers and ready-to-use drip lines
• Deep cycle batteries, composite lanterns and raw materials for the manufacture of deep cycle batteries and composite lanterns
• Menstrual cups
• Agriculture insurance premium or policy
• Photosensitive semiconductor devices, including photovoltaic devices, regardless of whether they are assembled in modules or made into panels, light-emitting diodes, solar water heaters, solar refrigerators and solar cookers
• Life jackets, life-saving gear, headgear and speed governors
• Any goods or services supplied to the contractors and subcontractors of hydroelectric power, solar power, geothermal power, or biogas and wind energy projects
• Movie production
• Bibles and Qur’ans and textbooks
• Construction materials for development of an industrial park or free zone to a developer or operator of an industrial park or free zone, the developer’s investment capital is at least USD50 million
• The supply of services to conduct a feasibility study, design and construction to a developer of an industrial park or free zone whose investment is at least USD50 million
• Services to conduct feasibility study, design and construction; the supply of locally produced materials for the construction of a factory or a warehouse and the supply of locally produced raw materials and inputs or machinery or equipment to an operator within an industrial park, free zone or any other person carrying on business outside the industrial park or free zone. Minimum investment capital is USD10 million in the case of a foreigner or USD300,000 in case of a citizen; or USD150,000 for a citizen whose investment is placed upcountry who uses at least 70% of the raw materials that are locally sourced, subject to their availability and at least 70% of the employees are citizens earning an aggregate wage of at least 70% of the total wage bill; and who processes agricultural goods, manufactures or assembles medical appliances, medical sundries or pharmaceuticals, building materials, automobile, household appliances; manufactures furniture, pulp, paper, printing and publishing of instructional materials; estab lishes or operates vocational or technical institutes; carries on business in logistics and ware housing, information technology or commercial farming; or manufactures tires, footwear, mattress or toothpaste, manufactures chemicals for agricultural and industrial use, textiles, glassware, leather products, industrial machinery and electrical equipment, sanitary pads and diapers
• Services to a manufacturer, other than a manufacturer referred to above, whose investment capital is at least USD30 million for a foreign investor or USD5 million for a local investor to conduct a feasibility study or to undertake design and construction, or in the case of any other manufacturer, from the date on which the manufacturer makes an additional investment equiv alent to USD30 million for a foreign investor or USD5 million for a local investor — (i) who has the capacity to use at least 70% of the raw materials that are locally sourced, subject to their availability; and (ii) who has the capacity to employ at least 70% of the employees that are citizens earning an aggregate wage of at least 70% of the total wage bill.
• Services to conduct a feasibility study, design and construction; locally produced materials for construction of premises, infrastructure, machinery and equipment or furnishings and fittings that are not available on the local market to a hotel or tourism facility developer whose invest ment capital is USD8 million with room capacity exceeding 100 guests
• Services to conduct a feasibility study, design and construction; locally produced materials for construction of premises, infrastructure, machinery and equipment or furnishings and fittings to a hospital facility developer whose investment capital is at least USD5 million and who develops a hospital at the level of a national referral hospital with capacity to provide specialized medical care
• Services to conduct a feasibility study, design and construction; the supply of locally produced materials for the construction of premises and other infrastructure, machinery and equipment or furnishings or fittings for technical or vocational institute operators whose investment capi tal is at least USD10 million in the case of a foreigner or USD1 million in the case of a citizen
• Earth moving equipment and machinery for development of an industrial park or free zone to a developer of an industrial park or free zone whose investment is at least USD50 million
• Wet processing operations and garmenting, cotton lint, artificial fibers for blending; polyester staple fiber, viscose rayon fiber yarn other than cotton yarn, textile dyes and chemicals garment accessories, textile machinery spare parts, industrial consumables for textile production, textile manufacturing machinery and equipment
• Fabrics and garments made in Uganda by vertically integrated textile mills that operate spin ning, weaving/knitting, wet processing operations and garmenting
• Production inputs into iron ore smelting into billets for further value addition in Uganda
• Production inputs necessary for processing of hides and skins into finished leather products in Uganda and the supply of leather products wholly made in Uganda
• Imported mathematical sets and geometry sets used in educational services
• Woodworking machines
• Welding machines and sewing machines
• Imported crayons, colored pencils, lead pencils, rulers, erasers, stencils, technical drawing sets, educational computer tablets, educational computer applications or laboratory chemicals for teaching science subjects used in educational services
• Cotton seed cake
• Supply of the following services:
Software and equipment installation services to manufactures Services incidental to telemedical services
Royalties paid in respect of agricultural technologies
• The supply of accommodation in tourist hotels and lodges located upcountry
• The supply of processed milk
• The supply of locally developed computer software, its maintenance and software licenses
• The supply of services to conduct a feasibility study, design and construction; the supply of locally produced materials for construction of premises, infrastructure, machinery and equip ment or furnishings and fittings that are not available on the local market to a hotel or tourism facility developer whose investment capital is USD10 million with a room capacity exceeding 30 rooms; or to meetings, incentives, conferences and exhibitions facility developer whose investment capital is not less than USD1 million
• The supply of accommodation in tourist lodges and hotels inside a radius of 50km from the boundaries of Kampala from 1 July 2020 to 30 June 2021
• The supply of liquefied gas and denatured fuel ethanol from cassava
Option to tax for exempt supplies. The option to tax exempt supplies is not available in Uganda.
E. Time of supply
The following are the rules for determining the time of supply:
• If goods are applied for a person’s own use, the time of supply is the date on which the goods or services are first applied to the person’s own use
• If the goods or services are supplied as a gift, the time of supply is the date on which ownership in the goods passes or the performance of the service is completed
• In all other cases, the time of supply is the earliest of the following dates:
The goods are delivered or made available, or the performance of the service is completed
The payment for the goods or services is made
A tax invoice is issued
If goods are supplied under a rental agreement or if goods or services are supplied under an agreement or law that provides for periodic payments, the goods or services are treated as suc cessively supplied for successive parts of the period of the agreement or supplied as determined by that law, and each successive supply occurs on the earlier of the date on which payment is due or received.
Deposits and prepayments. For deposits and prepayments, the time of supply occurs, and VAT is due, on the date on which the payment for the goods or services is made.
Continuous supplies of services. For supplies of continuous supplies of services, the goods or services are treated as successively supplied for successive parts of the period of the agreement and each successive supply occurs on the earlier of the date on which payment is due or received.
Goods sent on approval for sale or return. For supplies of goods sent on approval for sale or return, the time of supply occurs, and VAT is due on the date on which the goods are delivered or made available.
Reverse-charge services. Where applicable in cases of import of services made by a contractor or licensee in the petroleum or mining sector, or a person providing business process outsourcing services, the reverse charge and VAT is due at the time of import of the services. The same treat ment applies to imported goods.
Leased assets. For supplies of leased assets, the assets are treated as successively supplied for successive parts of the period of the agreement and each successive supply occurs on the earlier of the date on which payment is due or received.
Imported goods. VAT on imported goods is due at the time of import.
F. Recovery of VAT by taxable persons
A credit can be issued to the taxable person for the tax payable with respect to taxable supplies made to that person during the tax period and all imports of goods made by that person during the tax period if the supply or import is for use in the business of the taxable person.
On registration, a credit can be issued to a taxable person for input tax paid or payable with respect to taxable supplies of goods, including capital assets, made to the person, and imports of goods, including capital assets, made by the person before registration, if all of the following conditions are satisfied:
• The supply or import was for use in the business of the taxable person
• The goods are on hand at the date of registration
• The supply or import occurred not more than 6 months prior to the date of registration or in case of manufacturers, not more than 12 months before the date of registration
The time limit for a taxable person to reclaim input tax in Uganda is six months.
Nondeductible input tax. VAT may not be recovered on purchases of goods and services that are not used for business purposes (for example, goods acquired for private use by an entrepreneur). In addition, input tax may not be recovered for certain business expenses.
The following lists provide some examples of items of expenditure for which input tax is not deductible and examples of items for which input tax is deductible if the expenditure is for purposes of making a taxable supply.
Examples of items for which input tax is nondeductible
• Taxable supply or import of a passenger automobile and the repair and maintenance of the automobile, including spare parts
• Entertainment (provision of food, beverages, tobacco, accommodation, amusement, recreation or hospitality of any kind), unless the person is in the business of providing entertainment or supplies meals or refreshments to its employees on premises operated by it, or on its behalf, solely for the benefit of its employees
Examples of items for which input tax is deductible (only if related to a taxable business use)
• A supply or import of a passenger automobile and the repair and maintenance of the automo bile, including spare parts, if the automobile is acquired by the taxable person exclusively for the purpose of making a taxable supply of that automobile in the ordinary course of a continu ous and regular business of selling, dealing in or hiring of passenger automobiles
• Entertainment if the taxable person is in the business of providing entertainment
• Supplies of meals or refreshments by employers to their employees in premises operated by the employers or on the employers’ behalf, solely for the benefit of the employees
Partial exemption. If a taxable supply to, or an import of goods by, a taxable person is partly for a business use and partly for another use, the amount of the input tax allowed as a credit is the part of the input tax that relates to the business use.
If the percentage of the total amount of taxable supplies to the total amount of all supplies made by the taxable person during the period (other than the supply of goods as part of the transfer of a business as a going concern) is less than 5%, the taxable person may not credit any input tax for the period.
If the percentage of the total amount of taxable supplies to the total amount of all supplies made by the taxable person during the period (other than the supply of goods as part of the transfer of a business as a going concern) is more than 95%, the taxable person may credit all input tax for the period.
Approval from the tax authorities is required to use the partial exemption standard method in Uganda. Special methods are not allowed in Uganda.
Capital goods. The VAT law in Uganda does not define “capital goods.” In practice this means any goods other than finished consumer goods that may be used in the production process.
Tax incurred on capital goods is claimable where these capital goods are used in the carrying on of the taxable person’s business activities. Like with all other input tax incurred where the goods are used for both taxable and exempt supplies, the input tax will be apportioned using the Standard method in order to allow input tax credit in respect of taxable supplies.
The standard method is A*B/C where A is the total amount of input tax for the period, B is the total amount of taxable supplies made by the taxable person and C is the total amount of all supplies made by the taxable person during the period other than an exempt supply of goods as part of the transfer of a business as a going concern by one taxable person to another taxable person.
Where the standard method disadvantages the taxable person, the Commissioner General may approve an alternative method (standard alternative method) to calculate the input tax to be cred ited. Using this method, the taxable person may directly attribute input tax separately to the exempt and taxable supplies in so far as it is possible and may claim credit for all input tax related to taxable supplies and none of input tax related to exempt supplies.
Refunds. If, for a tax period, a taxable person’s input tax credit exceeds the person’s liability for tax for that period, the Commissioner General must refund the excess to the person within one
month after the due date for the return for the tax period to which the excess relates, or within one month of the date when the return was filed if the return was not filed by the due date.
Notwithstanding the above, if the taxable person’s input credit exceeds its liability for tax for that period by less than UGX5 million (approx. USD1,350), the Commissioner General may offset the excess amount against the future liability of the taxable person, except in the case of a licensee or person providing mainly zero-rated supplies. In addition, with the consent of the tax able person, if the taxable person’s input credit exceeds its liability for tax for that period by UGX5 million (approx. USD1,350) or more, the Commissioner General may offset the excess amount against the future liability of the taxable person or apply the excess in reduction of any other tax not in dispute that is due from the taxable person.
A claim for a refund of input tax must be made in a return within three years after the end of the tax period in which tax was overpaid.
Pre-registration costs. A credit can be issued to a taxable person on becoming registered for input tax paid or payable in respect of:
• All taxable supplies of goods, including capital assets, made to the person prior to the person becoming registered
• All imports of goods, including capital assets, made by the person prior to becoming registered
Where the supply or import was for use in the business of the taxable person, the input tax paid for those supplies is creditable provided that the goods are on hand at the date of registration and that the supply or import occurred not more than six months prior to the date of registration, or 12 months for manufacturers.
Bad debts. A taxable person may seek a refund for the portion of tax paid that it has not received payment for within two years after the supply. The taxable person should have taken all steps to pursue the payment and reasonably believes that it will not be paid.
Noneconomic activities. Input tax incurred on purchases that are used for noneconomic activities is not recoverable in Uganda.
G. Recovery of VAT by non-established businesses
Input tax incurred by non-established businesses in Uganda is not recoverable.
H. Invoicing
VAT invoices. A taxable person making a taxable supply to any person must issue to that other person, at the time of supply, with an original tax invoice for the supply.
A tax invoice must contain the following particulars:
• The words “tax invoice” written in a prominent place
• The commercial name, address, place of business and tax identification number of the taxable person making the supply
• The commercial name, address, place of business and tax identification number of the recipient of the taxable supply
• The individualized serial number and the date on which the tax invoice is issued
• A description of the goods or services supplied and the date on which the supply is made
• The quantity or volume of the goods or services supplied
• The tax rate for each category of goods and services described in the invoice
• The total amount of tax charged, the consideration for the supply exclusive of tax and the con sideration inclusive of tax
Credit notes. Where a tax invoice has been issued and the amount shown as tax charged in that tax invoice exceeds the tax properly chargeable in respect of the supply, the taxable person mak ing the supply shall provide the recipient of the supply with a credit note.
A credit note may also be issued by a person where a tax invoice has been issued and tax properly chargeable in respect of the supply that exceeds the amount shown as tax charged in the tax invoice.
A credit note must contain the following particulars:
• The words “credit note” in a prominent place
• The commercial name, address, place of business, and tax identification and VAT registration numbers of the taxable person making the supply
• The commercial name, address, place of business, and tax identification and VAT registration numbers of the recipient of the taxable supply
• The date on which the credit note was issued
• Tax rate
• Taxable value of the supply shown on the tax invoice, the correct amount of the taxable value of the supply, the difference between those two amounts and the tax charged that relates to that difference
•
A brief explanation of the circumstances resulting in the issuance of the credit note
• Sufficient information to identify the taxable supply to which the credit note relates
Electronic invoicing. Electronic invoicing is mandatory for all taxable persons in Uganda. The Commissioner shall, by notice in the Gazette, specify certain taxable persons for whom it is mandatory to issue e-invoices or e-receipts or employ electronic fiscal devices that shall be linked to the centralized invoicing and receipting system or devices authenticated by the Uganda Revenue Authority. Taxable persons do not have to apply to use electronic invoicing. E-invoicing became mandatory on 1 July 2020 through a public notice issued by URA that later extended the implementation date to 1 January 2021.
The Electronic Fiscal Receipting and Invoicing System (EFRIS) has been implemented in FY2020/ 21 (see the subsection below Digital tax administration for more detail). This system manages the issuance and centralized tracking of all invoices and receipts (both paper and electronic) by tax able persons in Uganda.
Simplified VAT invoices. Simplified tax invoices may be issued by registered persons with a tax able turnover below UGX100 million per annum (USD27,000), for taxable supplies made to another registered person, provided the value of any individual item on the invoice does not exceed UGX50,000 (USD14) and the total invoice does not exceed UGX100,000 (USD27).
Self-billing. Self-billing is not allowed in Uganda.
Proof of exports. Goods that are supplied by a registered taxable person to a person in another country that are delivered by a registered taxable person to a port of exit for export may be invoiced at the zero rate if the registered taxable person obtains documentary proof and if the goods are removed from Uganda within 30 days of delivery to a port of exit.
The Commissioner General may require that goods for export specified in a notice in the Uganda Gazette be distinctively labeled by the registered taxable person. The Commissioner General will issue guidelines to specify the color, size and type of labels.
For an export transaction to qualify for the zero rate, a registered taxable person must show as proof of export the following:
• A copy of the bill of entry or export certified by the customs authorities
• A copy of the invoice issued to the foreign purchaser with tax shown at the zero rate
• Evidence sufficient to satisfy the Commissioner General that the goods have been exported, in the form of an order from, or signed contract with, a foreign purchaser, or transport documen tation that identifies the goods such as transit order or consignment note, copy of bill of lading, copy of airway bill or copy of transit document
If services are supplied by a registered taxable person to a person outside Uganda, the services qualify for a zero rate only if the taxable person can provide evidence that the services are used or consumed outside Uganda. This evidence can be in the form of a contract with a foreign pur chaser and must clearly indicate that the place of use or consumption of the service is outside Uganda or that the service is provided for a building or premises outside Uganda.
Foreign currency invoices. Foreign currency invoices are treated in the same manner as domestic currency invoices, which is the Ugandan shilling (UGX). However, the tax authorities require that for purposes of accounting for output tax and input tax, the exchange rate prescribed by the tax authorities for that tax period is used.
Supplies to nontaxable persons. Taxable persons (i.e., those registered for VAT or required to be registered for VAT in Uganda) making supplies to any person are required to issue all customers with a VAT invoice. Simplified tax invoices can only be issued by a registered person with a tax able turnover below UGX100 million (approx. USD28,000) per annum to another registered taxable person and in respect to individual items on the invoice that do not exceed UGX50,000 (approx. USD15) and the total invoice value does not exceed UGX100,000 (approx. USD30).
Records. Every taxable person is required for tax purposes to maintain in the English language, as may be required to determine or readily ascertain the taxable person’s tax liability under a tax law. The records kept shall contain sufficient transaction information, and the case of an elec tronic format shall be capable of being retrieved and converted to a standard record format equivalent to that contained in an acceptable paper record.
The records to be maintained include: tax accounts and records, purchase records, sales records, export records, sales invoices, cash registers, credit and debit notes, computer records, bank deposit books and account statements, sales contracts, stock records, employment contracts and purchase receipts, among others. Any information relating to the business of the company.
Such records may be kept outside Uganda. However, a taxable person is required to readily avail information as and when it is requested by the URA.
Record retention period. The record retention period is a minimum of five years.
Failure to maintain proper records as required by law attracts a penal tax equal to double the amount of tax for the period to which the failure relates.
Electronic archiving. The Tax Procedure Code Act requires every taxable person to maintain records including in electronic format, for a period of five years. Records (including invoices) kept in electronic format should be capable of being retrieved and converted to a standard record for mat equivalent to that contained in an acceptable paper record.
I. Returns and payment
Periodic returns. The VAT tax period is one month. Returns must be filed by the 15th day after the end of the tax period. A “nil” return must be filed if no VAT is payable (either because the taxable person does not make any supplies or input tax exceeds output tax in the period).
If the normal filing date falls on a public holiday or on a weekend, the VAT return must be submitted on the last working day before that day.
Periodic payments. Payment must be made in full by the 15th day after the end of the tax period.
Payment is made by generating a payment registration number (PRN) on the URA web portal, selecting preferred mode of payment, i.e., cash, check, EFT, as well as preferred bank. Upon generation of the PRN, payment will be made by the taxable person in the bank or any other preferred mode of payment and URA will acknowledge receipt of payment in the taxable person’s account.
Electronic filing. Electronic filing is mandatory in Uganda for all taxable persons. All VAT returns are submitted online. The returns are populated and uploaded using return templates designed by the tax authorities. Similarly, amendments to VAT returns are also done online.
Payments on account. Payments on account are not required in Uganda.
Special schemes. VAT withholding scheme. A designated withholding agent for VAT purposes is required to withhold and remit 6% of the taxable value on making payment for taxable supplies. The withholding VAT will not apply to a taxable person who the Commissioner General thinks is satisfied has regularly complied with the obligations imposed on the taxable person by the Value Added Tax Act Cap 349.
If a taxable person is included on the list of designated VAT withholding agents, they are required to withhold VAT from nonexempted suppliers at the rate of 6% of the taxable value of the supply. The list of designated withholding VAT agents was published through legal notice No. 1 of 2020 published in the Gazette on 29 May 2020. The list of exempt persons was issued by the Commissioner General, Uganda Revenue Authority. A public notice issued by the URA on 27 October 2021 notified withholding agents that from 1 December 2021, noncompliance with the requirement to withhold will be punishable under the law.
Annual returns. Where a taxable person who deals in both exempt and taxable supplies appor tions its input tax using the fraction of taxable supplies to total supplies made in any tax period, the taxable person is required to make a calculation of input tax based on the annual value of taxable and exempt supplies within the period following the end of the year.
Supplementary filings. No supplementary filings are required in Uganda.
Correcting errors in previous returns. VAT returns can be amended within a period of three years from filing the original return. This is done through the URA web portal by uploading an amended return. Where there is tax outstanding, a taxable person is required to remit the same to URA.
Voluntary Disclosure Program. Taxable persons are given an opportunity to voluntarily declare the taxes that they did not pay and benefit from the Voluntary Tax Disclosure Program. This tax amnesty will waive interest and penalties for taxable persons who have unpaid tax liabilities and voluntarily declare the same before being prompted by an action or threat by URA, such as ini tiation of a tax investigation, request for tax information, tax advisory letter, tax health check/ review, notice for audit, tax query or compliance visit by the URA officers.
Procedure of voluntary disclosure. A taxable person fills out the voluntary disclosure form (VDF) from the URA web portal in its entirety. Payment must be made for the principal tax due and attach the payment registration number (PRN) form highlighting the payment made. Then the taxable person must submit the form to any URA offices near them or online via email to services@ura.go.ug.
The taxable person may be required to submit a return or amend an existing return subsequent to submission of the VDF. A voluntary disclosure certificate signed by the Commissioner will be issued to the taxable person.
Digital tax administration. Electronic Fiscal Receipting and Invoicing System. The Electronic Fiscal Receipting and Invoicing System (EFRIS) is an automated compliance system that has been implemented in FY 2020/2021 by the Uganda Revenue Authority. It is intended to manage the issuance and centralized tracking of all invoices and receipts by taxable persons in Uganda. The implementation date was 1 July 2020, but this was extended to and took effect on 1 January 2021.
Initiated transactions by the taxable person are transmitted to the URA’s bank end system in real time for fiscalization to produce electronic fiscal documents.
The use of this system is mandatory for all VAT-registered persons in Uganda to issue e-invoices and e-receipts through EFRIS.
Registration is done on the URA web portal account and completing the e-invoicing section. Currently the channels available are:
• System to system, applicable to taxable persons who use robust accounting systems
• URA web portal that requires manual configuration of the product listings, pricing and inven tory details
• Client application that can be downloaded from the URA portal and installed on the taxable person’s computer to enable issuance of e-invoices and e-receipts
• The use of an electronic fiscal device attached to the taxable person’s point of sale
• Electronic dispenser controller used in the fuel retail sector
• Use of a USSD quick code issued by URA
The EFRIS is now fully operational.
J. Penalties
Penalties for late registration. A person who fails to apply for registration as required by the VAT law is liable to pay a penalty equal to the higher of double the amount of the tax payable during the period commencing on the last day of the period when the obligation to register arises until either the person files an application for registration or the tax authority registers the person forcefully or UGX1 million.
Penalties for late payment and filings. The late submission of a return is subject to a penalty of UGX200,000 (approx. USD55) per month or an interest charge at 2% compounded for the period the return is outstanding, whichever is higher.
A person who fails to pay tax imposed before the due date is liable for a penal tax on the unpaid tax at 2% compounded.
The interest due and payable on unpaid tax shall not exceed the aggregate of the principal tax and penal tax.
For the avoidance of doubt, where the interest due and payable as at 30 June 2017 exceeds the aggregate referred to above, the interest in excess of the aggregate shall be waived.
Penalties for errors. Where a person makes a statement to an officer of URA that is false and misleading in a material particular or omits any matter or thing without which the statement is misleading and the tax properly payable exceeds the tax assessed based on the false or misleading information is liable to penal tax equal to double the amount of the excess.
Failure to notify or late notification of any changes in the VAT registration details of a taxable person is a tax offense that attracts upon conviction a fine not exceeding UGX1 million or imprisonment not exceeding two years or both. If it was done knowingly or recklessly, a person is liable on conviction to a fine not exceeding of UGX3 million or imprisonment not exceeding six years or both. For further details, see the subsection Changes to VAT registration details above.
Penalties for fraud. Fraud is a criminal offense and will be triable in criminal courts. Fraud varies, and each case will be determined on its own set of facts.
Personal liability for company officers. Where an offense under the tax law is committed by a com pany, the offense is treated as having been committed by a person who, at the time the offense was committed is the chief executive officer, managing director, company secretary, treasurer or other similar officer of the company or acting or purporting to act in that capacity.
In case the offense is committed by a partnership, every partner at the time of commission of the offense is treated as having committed the offense.
Some of the tax offences include:
• Failure to furnish a tax return; penalty upon conviction is a fine not exceeding UGX1 million (approx. USD278)
• Failure to maintain proper records is an offense and upon conviction a person is liable to a fine not exceeding UGX2 million (approx. USD555) or imprisonment not exceeding six years or both. Additionally, failure to maintain proper records attracts a penal tax equal to double the amount of tax payable for the period to which the failure relates
• Use of a false tax identification number knowingly or recklessly on a tax return is an offense and upon conviction a person is liable to a fine not exceeding UGX3 million (approx. USD833) or imprisonment not exceeding six years or both
• Failure to comply with any obligations under the tax laws is punishable and upon conviction a person is liable to a fine not exceeding UGX2 million (approx. USD555)
• Making materially false or misleading statements to a tax officer is an offense and a person is liable on conviction to UGX4 million (approx. USD1,110) or imprisonment not exceeding ten years or both
• Obstructing a tax officer in performance of their duties is also an offense and a person upon conviction is liable to a fine not exceeding UGX5 million (approx. USD1,388) or imprisonment not exceeding 10 years or both
Statute of limitations. The statute of limitations in Uganda is three years. The Commissioner may make an additional assessment within a three-year period from the date the taxable person fur nished the self-assessment return or the Commissioner served a notice of the original assessment or notice of the additional assessment on the taxable person. However, in case of fraud or any gross or willful neglect has been committed by, or on behalf of, the taxable person, or new information has been discovered in relation to the tax payable by the taxable person for a tax period, additional assessments can be made at any time.