INVESTMENT TRADER

WHO IS AN INVESTMENT TRADER UNDER VAT
An Investment Trader for the purposes of VAT is a trader who has been approved or certified by the UGANDA INVESTMENT AUTHORITY as an investor in Uganda. The Investor has to fulfill the conditions prescribed by the Authority in order to receive certain tax advantages.

WHAT HAS THIS TO DO WITH VAT?
If you are starting a business in Uganda you may incur significant business expenses before you commence trade. These expenses will generally be liable to VAT which you will have to pay. So you will need to register for VAT.

WHAT CAN I DO TO RECOVER THIS VAT?
The VAT Regulations make provision for you to apply for VAT registration prior to making taxable supplies so that you can claim a refund of the VAT you have been charged. This is to ensure that VAT is not a burden in setting up your business.

WHAT ACTION MUST I TAKE?
You must obtain an Application for VAT Registration (Form VAT 101) from your local VAT office and an Application for VAT Registration as an Investment Trader (form VAT 104). Complete both forms and return them to the VAT Office.

WHAT ARE THE CONDITIONS FOR VAT REGISTRATION AS AN INVESTMENT TRADER?
a) You must be able to produce evidence from the Uganda Investment Authority in the form of a license certificate or letter of approval.

b) You must satisfy the Commissioner General that your investment business will eventually make taxable supplies and that significant VAT expenses will be incurred. An investment business which will only make exempt
supplies will not be registered.

The evidence required to satisfy the Commissioner General can be in the form of business plans, a feasibility study, proposed contracts or a patent application, together with details of capital assets and stock purchases.

c) You must undertake to keep the prescribed books and records required in the VAT Statute and file VAT returns by the due date.

d) You must understand that you can only remain registered as an investment trader for a maximum period of four years and give an undertaking to repay all refunds of VAT received within.

e) The Commissioner General of the Uganda Revenue Authority may require you to provide security for repayment of the tax refunded should you not make taxable supplies within the two year period.

ARE THERE ANY RESTRICTIONS ON RECLAIMING THE TAX I AM CHARGED?
Yes. You cannot reclaim VAT you are charged on passenger automobiles, entertainment, or the repair and maintenance of passenger automobiles unless you are to be in the business of dealing in or hiring passenger automobiles or providing entertainment.

You can only provisionally re-claim input tax that is wholly attributable to your intended taxable supplies. SEE LEAFLET No. 7.

HOW DO I CEASE BEING REGISTERED AS AN INVESTMENT TRADER?
As soon as you make taxable supplies and declare them on your VAT return you will cease to be an investment trader. Your VAT office will notify you that you have met the conditions of your investment trader registration and that you are now registered as a normal VAT payer.

If after two years you have not made any taxable supplies, you will received notice canceling your registration, and an assessment for repayment of the total amount of the refunds you have received. You will have 15 days to make the payment to the Uganda Revenue authority.

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