REGISTRATION GUIDE For Value Added Tax

REGISTRATION GUIDE
This leaflet helps you to decide whether or not you should register for VAT. However It does not exhaust everything there is to know about VAT registration. More information can be obtained from your nearest Uganda Revenue Authority Office.

It is imperative to remember that if you are liable to register and you do not apply for registration at the proper time, you will be committing an offence under the VAT Law and you may be liable to a financial penalty. Once registered your registration will be backdated.

2.01 WHO HAS TO BE REGISTERED FOR VAT?

Any person conducting a commercial enterprise or intending to conduct a commercial enterprise may apply to be registered for VAT. However, if the taxable turnover of the enterprise that is gross income for three consecutive calendar months exceeds or is likely to exceed Shs12.5 million the person conducting the enterprise must register for VAT with Uganda Revenue Authority.

Turnover related to exempt supplies as listed in the EXEMPT GOODS AND SERVICES IS NOT to be included in the total for deciding if VAT registration is compulsory.

ALL PROFESSIONALS except/other than MEDICAL and VETERINARY PRACTIONERS are compulsorily required to register irrespective of their annual turnover and local and urban authorities.

The term any person for purposes of VAT registration includes:-

- Sole Proprietor,
- Company
- Partnership
- Estate of the deceased
- Trust
- Incorporated body or
- Unincorporated body
- Club or Association

A commercial enterprise:- This refers to any business of whatever nature and it includes:-

(a) Ordinary business e.g. Shops, Contractors, Manufactures, Wholesalers etc.
(b) Trades and Professions e.g. Builders, Engineers, Accountants, Lawyers, etc.
(c) Activities of non-profit making bodies e.g. Societies, Associations, Sporting Clubs, etc.

2.02 HOW DO I WORK OUT WHETHER I HAVE TO BE REGISTERED OR NOT?

You are obliged by law to register if you are doing any business which on 1st July, 1996 or thereafter is likely to have taxable turnover in three consecutive calendar months exceeding Shs. 12.5 million.

You are obliged by law to register if you are a professional i.e. Engineer, Lawyer, Economist, Architect, Publisher, Auctioneer, Estate Agent, Valuer, Accountant, Auditor, Clearing and Forwarding Agent or other professional irrespective of your turnover. EXCEPT Medical and Veterinary Practitioners. Whose supplies are exempt and consultants to whom the threshold applies. It includes a national, regional or local public authority or body See 8(5).

2.03 HOW DO I BECOME LIABLE TO REGISTER?

Normally you only have to consider your business turnover over the past 3 months. If during the past 3 calendar months you made taxable supplies whose gross value exceeded Shs.12. 5 million then you have to register for VAT.

Also if you reasonably expect that during the next 3 calendar months the total value of your taxable supplies is likely to exceed Shs.12. 5 million then you need to register for VAT.

Remember that even if you don’t have to register at present, and in the future if your business improves and your taxable turnover increases to the level mentioned above you must register as required by the law.

Please note that your taxable turnover is the value, not just the profit, of all your taxable supplies made in Uganda including zero-rated (exports).

2.04 HOW DO I CALCULATE MY TURNOVER?

Your turnover is calculated on an on going basis. Two periods need to be considered - the past 3 calendar months and the next 3 calendar months, on a month by month basis.
You should estimate at the end of each trading calendar month the total value of taxable goods and services supplied by all your businesses for the past 3 months. Where the total exceeds Shs12. 5 million you are required to register for VAT. or

If after estimating the total value of supplies for the next 3 months you expect to exceed Shs12. 5 million then you are required to register.

2.05 CAN I BE REGISTERED IF MY TURNOVER IS BELOW THE LIMIT?

If your taxable turnover is below the12. 5 million limit in any 3 months of business activity you may apply for voluntary registration. You will however have to satisfy the Uganda Revenue Authority that your activities constitute a business for VAT purposes. Before applying you should consider whether registration will really be of benefit to you.

2.06 WHAT FACTORS DO I HAVE TO CONSIDER IN DECIDING WHETHER TO APPLY FOR REGISTRATION OR NOT?

In considering whether you should register for VAT or not, you should ask yourself these questions:
(a) Is my creditable input tax likely to exceed the tax I have to charge on my sales?

For example if you are a trader dealing in zero-rated supplies such as:- milk, maize flour, dental, medical or veterinary equipment or seeds, fertilizers, pesticides and hoes or export of goods or services as the case may be, you should consider whether you wish to register voluntarily to claim refunds of excess tax paid on purchases.

HOW DO I REGISTER FOR VAT?

Applications for compulsory as well as voluntary registration must be made on form VAT 101, “Application for VAT Registration”, which is obtainable from your local VAT Office. You should fill in this form and provide any extra information required and take it to your nearest VAT office by the 20th day of the month following the month you exceed the turnover limit requiring registration.

Please note that there are penalties for a delayed application.
Once the application for registration has been made, Uganda Revenue Authority will advise you of your VAT Registration number which will be in addition to your TIN (Tax Identification Number). A Certificate of Registration will be issued to you which you will have to display at your main business premises.
If registration is disallowed, you will be notified and the reasons for the refusal explained.

2.07 IF I WANT TO REGISTER VOLUNTARILY, CAN UGANDA REVENUE AUTHORITY REFUSE TO REGISTER ME?

Voluntary registration is at the discretion of the Commissioner General. He can refuse to register any person who:-

- has no fixed place of abode or business;
- does not keep proper accounting records;
- has no bank account.
- has previously been registered for VAT purposes but failed to perform his duties under the VAT law.

2.08 CAN I REGISTER BEFORE I COMMENCE BUSINESS?

If you are not yet making taxable supplies, but have started a business activity in which you intend to make taxable supplies e.g. building a factory, you may apply to be registered as an Investment trader from a date before you start making such supplies.

You must produce to the Commissioner General satisfactory evidence of your firm’s intention to make taxable supplies by way of business e.g. investment license, feasibility study, proposed contracts, details of stock and capital asset purchases, patent application acknowledgement etc.

If your application is accepted, you will be able to provisionally re-claim Input tax that is wholly attributable to your intended taxable supplies. Full details of the Input tax rules which appear in the VAT regulations will be given to you in writing, but if you fail to make taxable supplies within a two year period you will be required to repay to URA all the input tax you have been refunded.

2.09. WHAT ABOUT ANY VAT I PAY BEFORE REGISTER?

Any VAT charged on goods that you used in setting up your business can be re-claimed provided it is paid or goods in stock at the time of registration.
(a) Wholesalers, etc.
(b) Traders and Professions e.g. Builders, Engineers, Accountants, Lawyers, etc.
(c) Activities of non-profit making bodies e.g Societies Associations, Sporting Clubs, etc.

2.10 WHEN DO I START TO CHARGE VAT?
You should start keeping VAT records and charging VAT to your customers from the date shown on your Certificate of Registration. You will have to account for VAT from the date on which you were registered which will be noted on your Certificate of Registration.

2.11 WHAT RECORDS DO I NEED TO KEEP FOR VAT PURPOSES?

You must keep records of all supplies and purchases you make and receive and a summary of VAT for each period covered by your VAT returns. This is called a “VAT ACCOUNT”. (See VAT.9 VAT ACCOUNTS & RECORDS) If you are already in business, you will find that your normal business records can be adapted to give this information.

2.12 WHAT ABOUT MY VAT RETURNS?

Every month, you must file a VAT RETURN (Form VAT 200). The period covered by the return is called a tax period. You have to fill in details of the supplies you have made and received in that period and pay the total tax you owe to Uganda Revenue Authority, or claim a repayment if tax is owed to you.

Your VAT payment must be made to an authorized bank (currently UCB) by the 15th day of the month following the tax period covered by the return and the VAT RETURN must reach your VAT office by the same date. There are several authorised banks which include:-

Standard Chartered Bank
Stanbic Bank
Centenary Rural Development Bank
Orient Bank

There are penalties for late filing of the return and for late payment or failure to pay the tax.

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