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VAT
is a tax on consumer expenditure. It is collected on business transactions
and imports.
Most
business transactions involve supplies of goods or services.
VAT
is payable on supplies which are made:
- in
Uganda;
- by
a taxable person;
- in
the course or furtherance of a business; and
- Are
not exempted or zero-rated.
Supplies made in Uganda which are not exempt are called taxable supplies.
A
Taxable person can be an individual, firm, or company, as long as
such a person is required to be registered for VAT.
Supplies
are outside the scope of the tax if they are:
- Made
by someone who is not a taxable person.
- Not
made in the course or furtherance of business.
WHAT
IS OUTPUT TAX?
This is the VAT you charge your customer. It is only the taxable
person who will charge VAT in the course of effecting their supplies.
WHAT ARE TAXABLE SUPPLIES?
If you sell goods (supply of goods) or provide a service (supply
of services) as part of your business, it is likely that you are
making taxable supplies.
Anything
you do by way of business can be a taxable supply -not only things
you do in the ordinary course of your routine business. When you
are registered, you charge VAT on all the taxable supplies you make.
This VAT is your output tax.
WHAT
ARE THE RATES OF VAT?
There are two rates of tax. The standard rate which is 17% and the
zero rate, which is 0%.
ARE
THERE OTHER KINDS OF SUPPLIES?
Yes. There are exempt supplies as specified in the VAT law. They
include: financial services, insurance, medical, dental and nursing
services, passenger transportation services and the supply of petroleum
fuels. (The full list is provided in the information pertaining
to 'EXEMPT GOODS AND SERVICES').
It
is very important to know whether you are making any exempt supplies
because this affects the amount of VAT to be reclaimed.
HOW
DO I KNOW IF MY SUPPLIES ARE EXEMPT OR ZERO-RATED?
The information about exempt goods and services and 'zero rated
goods and services' list the supplies which are exempt and those
which are zero-rated. If you are not sure about any of your supplies,
ask your VAT office for advice.
Remember any Taxable supply, which is not Zero-rated is standard
rated.
WHAT
IS THE DIFFERENCE BETWEEN EXEMPT AND ZERO-RATED SUPPLIES?
Zero rated supplies are charged at 0%, and Exempt supplies are not
charged to tax at all. Therefore, Exempt supplies do not attract
Input Credit/refund.
WHAT
OTHER TAXABLE SUPPLIES MAY BE LIABLE TO VAT?
You should not just account for VAT on your day-to-day sales, there
may be other taxable supplies which you are making. Below are some
examples: -
a)
Sales to your staff (e.g. meals if you are in the business of selling
food - even if supplied free of charge, or goods at reduced prices
or free); or sales from vending machines;
b) Sales of business assets (e.g. equipment, furniture, commercial
vehicles);
c) Hire or loan of goods to someone else for consideration;
d) Gifts to friends or business representatives;
e) Goods which you or your family have taken from the business
for your own use;
f) Commission received in return for selling something on behalf
of someone else.
DO I STILL HAVE TO ACCOUNT FOR VAT IF NO MONEY IS PAID?
You must account for VAT on any gift of goods or services from the
business based on the fair market value of the goods or services
at the time the supply is made.
Similarly
you must account for VAT on the full value of anything you supply
if you receive goods or services in return (e.g. in a barter situation).
If
you do not charge VAT where you should, you will still have to account
for output tax. Whatever price you charge to your customer is treated
as including VAT.
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