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Uganda - Indirect Tax Guide

Uganda - Indirect Tax Guide

Explore the requirements and rules that apply to indirect taxes in Uganda.

Explore the requirements and rules that apply to indirect taxes in Uganda.

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General

Types of indirect taxes (VAT/GST)

VAT.

What is standard VAT/GST rate?

18 percent.

Are there any reduced rates, zero rates or exemptions?

Zero-rated supplies include:

  • exports
  • international transport of goods and passengers
  • drugs and medicines
  • educational materials
  • cereals grown, milled or produced locally
  • seeds, fertilizers, pesticides and hoes
  • sanitary napkins including tampons and inputs in their manufacture
  • leased aircrafts, aircraft engines, spare parts for aircraft and aircraft maintenance equipment.

Exempt supplies include:

  • financial services 
  • insurance services (health, life, micro insurance, reinsurance, agricultural)
  • educational, veterinary, medical, dental, nursing, social welfare, burial and cremation services
  • dental, medical and veterinary equipment, ambulances and contraceptives of all forms, diapers, maternity kits
  • supply of machinery, tools and implements suitable for use only in agriculture
  • unimproved land
  • sale, leasing or letting of immovable property, excluding:
    • commercial premises and hotel or holiday accommodation
    • for periods of 3 months or less
    • for parking or storing cars or other vehicles
    • serviced apartments
  • goods forming part of a going concern
  • precious metals and other valuables to the Bank of Uganda for the Treasury
  • petroleum fuels subject to excise duty, jet fuel and liquid petroleum gas
  • passenger transportation, excluding registered tour and travel operators
  • power generated by solar power
  • goods and services to the contractors and subcontractors of hydro-electric power projects
  • photosensitive semiconductor devices
  • betting, lotteries and games of chance
  • livestock, unprocessed foodstuffs and unprocessed agricultural products, except wheat grain
  • lifejackets, life-saving gear, headgear and speed governors
  • postage stamps.

What are the general and specific place of supply rules, if applicable?

Goods are considered to be supplied in Uganda, if delivered or made available in Uganda. Transported goods are considered to be supplied in Uganda if such goods were in Uganda when transportation began.

The supply of services is in Uganda if the business of the supplier from which the services are supplied is in Uganda.

The following services are specified to be in Uganda:

  • where the services are in connection with immovable property in Uganda
  • radio or broadcasting services received at an address in Uganda
  • electronic services delivered to a person in Uganda at the time of supply.

VAT/GST registration

Who is required to register for VAT/GST?

Anyone whose annual taxable turnover exceeds or is expected to exceed 150 million Ugandan shillings (UGX) in a 12-month period. Voluntary registrations where taxable turnover < UGX150 million is also possible.

Is voluntary VAT/GST registration possible for an overseas company?

Yes, provided the overseas company has a permanent establishment in Uganda.

Does an overseas company need to appoint a fiscal representative?

Yes.

Is VAT/GST grouping* possible?

No.

VAT/GST compliance

How frequently are VAT/GST and other indirect tax returns submitted?

Monthly — within 15 days of the month following the end of each tax period.

Can returns be filed and payments be made electronically?

Yes.

What are the exchange rate rules?

Amounts expressed in a currency other than UGX must be converted into UGX using the weighted average selling rates of the previous month for the currency concerned. These rates are issued by the Bank of Uganda at the beginning of every month.

Invoicing may be done in a foreign currency, however, the returns have to be filed in UGX.

VAT/GST recovery

Can an overseas company recover VAT/GST and other indirect taxes if not registered for VAT/GST locally?

No.

Is it a prerequisite that output tax be charged before input tax can be claimed?

No. A taxpayer can still claim input VAT in the VAT return even though there is no output tax charged for the period.

Are there any exemptions with the right to recover or deduct input VAT?

Input VAT cannot be deducted on:

  • entertainment expenses, except for an entertainment business or for meals supplied to employees by an employer on premises operated by the employer
  • passenger vehicles (including repairs, maintenance and spare parts), except motor dealers or rental businesses
  • 10 percent of telephone service charges.

VAT incurred for both exempt and taxable supplies should be apportioned.

For what period of time may input tax not previously claimed be claimed (i.e. prescription)?

There is no time limit for an input tax claim.

Where a VAT return reflects a refund due to the taxpayer, is the refund paid to the taxpayer or is the taxpayer required to utilize the refund as a credit against future payments?

For taxpayers dealing in standard rated supplies, the refund is claimable by the taxpayer in cash where the refund is above UGX5 million and can be used as a credit against future payments when it is below UGX5 million. Persons dealing in zero-rated supplies can claim a cash refund even when the amount is below UGX 5 million.

Invoices

Is a business required to issue tax invoices?

Yes.

Is it possible/mandatory to issue invoices electronically?

Possible but not mandatory.

Is it possible to issue recipient-created tax invoices?

Yes, for imported services.

Audits

Do tax audits take place on a regular basis?

The timing of audits is at the discretion of the Uganda Revenue Authority. Audits are conducted prior to refunds being released. The tax authority has a period of 5 years to review VAT records, however, in the event of fraud, gross or wilful neglect or discovery of new information, there is no time limit for a tax audit.

Are audits done electronically in your country/territory (e-audit)? If so, what system is in use?

No.

What penalties can arise from non-compliance?

The following non-compliance penalties are levied:

  • the greater of UGX200,000 or the compounded interest rate of 2 percent per month for outstanding returns
  • 2 percent interest compounded monthly for unpaid taxes
  • double the amount of excess tax for false or misleading declarations
  • double the amount of tax payable for failure to register.

Special indirect tax rules

Are there unique country/territory-specific indirect tax rules that differ from 'standard' indirect tax rules in other jurisdictions?

No.

Does a reverse charge mechanism apply?

Yes.

VAT is levied on imported services and is payable by the recipient of such services

Can VAT on reverse charges be claimed as input tax, to the extent that the expense on which the reverse charge VAT is accounted for, is used for taxable purposes?

No.

Can non-residents appoint local agents in order to avoid reverse charge VAT by virtue of charging standard rate VAT and accounting for such VAT through the agent?

No.

Are there indirect tax incentives available (e.g. reduced tax, tax holidays)?

Yes, there are incentives for specific sectors and investors.

Rulings

Is it possible to apply for formal or informal advance rulings from the tax authority?

Yes.

Are rulings and decisions issued by the tax authorities publically available?

No.

Other indirect taxes

Are there other indirect taxes not commented on above?

Yes, other indirect taxes include:

  • import duty
  • excise duty.

For further information please contact

Peter Kyambadde
Partner
KPMG in Uganda
T: +256 414 340315/6/7
E: pkyambadde@kpmg.co.ug

Footnote

*By ‘grouping’ we mean: either a consolidation mechanism between taxpayers belonging to the same group (payment and refund are compensated but taxpayers remain distinct) or a fiscal unity for VAT/GST purposes (several taxpayers are regarded as a single taxpayer).

Disclaimer

All information contained in this document is summarized by KPMG in Uganda, a member firm affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

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