EXEMPT GOODS AND SERVICES (SCHEDULE II)

Supplies of exempt goods and services are business transactions on which VAT is not chargeable at either the standard or Zero-rate. Exempt Supplies are not taxable supplies and do not form part of your taxable turnover for VAT registration purposes.

If you make only exempt supplies you cannot be registered for VAT.

If you make taxable and exempt supplies you cannot reclaim the Input Tax (tax paid on purchases) related to your exempt supplies (see ‘ WHAT CAN I CREDIT AS INPUT TAX’)

4.01 EXEMPT SUPPLIES UNDER VAT INCLUDE:-

• the supply of unprocessed foodstuffs , unprocessed agriculture products and livestock ( unprocessed is taken to include low value added activity such as sorting, drying, salting, filleting, deboning, freezing, chilling or bulk packaging provided the value added does not exceed 5of the total value of the supply.
  
• the supply of postage stamps.
  
• the supply of financial services.

Financial Services means:-

(a) granting, negotiating and dealing with loans, credit guarantees, and any security for money, including management of loans, credit or credit guarantees by the grantor;
(b) transactions concerning deposits and current accounts, payments, transfers, debts, cheques and negotiable instruments other than debt collection and factoring;
(c) transactions, relating to shares, stocks, bonds, and other securities, other than custody services.
(d) management of investment funds.

But does not include provision of credit facilities under a Hire Purchase or Finance Lease Agreement.

• the supply of insurance services
• the supply of unimproved land.
• the supply of way of lease or letting of immovable property other than

(a) a lease or letting of commercial premises.
(b) a lease or letting of hotel or holiday accommodation.
(c) a lease or letting of any immovable property not exceeding two months.
(d) a lease or letting for parking or storing cars or other vehicles.

• the supply of education services.
  ‘Education Services’ means education provided by:
  (a) a pre-primary, primary or secondary school;
  (b) a technical college or university;
  (c) an institution established for the promotion of adult education, vocational training, technical education, or the education or training of physically or mentally handicapped persons;
  
• the supply of accommodation in hotel and tourist lodges outside Kampala and Entebbe.
  
• the supply of medical, dental, and nursing services.
  
• the supply of social welfare services.

‘Social welfare Services’ means:-

(a) care for the elderly, sick and disabled, including care in a hospital, aged person’s home, and similar establishments.
(b) care and welfare services provided for the benefit of minors.

• the supply of betting, lotteries and games of chance.
  
• the supply of goods as part of the transfer of business as a going concern by one taxable person to another taxable person.
  
• the supply of burial and cremation services
  
• the Supply of Passenger transport services(Other than tour and travel operations).
  
• Supply of precious metals and other valuables to the Bank of Uganda for the state treasury.
  
  
  ‘Passenger transportation services’ means:-the transportation of fare-paying passenger and their personal effects by road, rail, water or air.
  
  
• the supply of petroleum fuels (motor spirit, Kerosene and gas oil, spirit type jet fuel and Kerosene jet fuel) subject to excise duty.
  
• the supply of feeds for poultry and livestock.
  
• the supply of dental, medical and veterinary equipment and supplies.
  
• the supply of machinery used for processing of agricultural or diary products.
  
• the supply of computers, printers and accessories.
  
• the supply of photo sensitise semi conductor devices including photo voltanic devices, whether or not assembled in modules or made into panels; light emitting devices.
  
• Supply of computer software.
  
• the supply of life jackets and head gear.
  
• the supply of mobile toilets and Ekoloo made from polyethylene.
  
• the supply of Insecticides.
  
• the feasibility studies, engineering designs and consultancy services and civil works related to roads and bridges construction.
  

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