Overview
VAT was introduced in Uganda with effect from 1 July 1996, to replace sales tax. VAT is charged in accordance with the provisions of the VAT Act, Cap. 349.
The Uganda Revenue Authority (URA), the head of which is the Commissioner-General, administers the VAT system.
Release date: May 2023
Rates and scope |
The standard rate of 18% applies to all supplies that do not qualify for an exemption, except for the zero-rated supplies. The following transactions are subject to VAT:
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VAT registration |
Compulsory registration The annual registration threshold for domestic supplies is Uganda Shillings (UGX) 150m (approximately USD40,000). Applications for registration for VAT must be made by all persons carrying on existing business activities whose annual taxable turnover exceeds or is expected to exceed UGX150m in a 12-month period or UGX37.5m in a three-month period. The standard rate of 18% applies to all supplies that do not qualify for an exemption, except for the zero-rated supplies. A person who fails to register is liable for a penalty equal to double the amount of tax payable during the period for which no application for registration was filed, or for which registration by the Commissioner-General has not yet taken place. |
Voluntary registration
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Group or branch registration
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Place of supply of services A supply of services is deemed to have taken place in Uganda if the business of the supplier that supplies the services is in Uganda. Notwithstanding the above, the supply of services takes place in Uganda if the recipient is not a taxable person and:
Where a non-resident person provides services to non-registered persons in Uganda and they fall in the categories above, then such services are classified as having been supplied in Uganda. The non-resident is required to register for VAT subject to the turnover conditions. A non-resident who is required to apply for registration but who does not have a fixed place of business in Uganda must appoint a tax representative in Uganda within 30 days after being required to apply. If the non-resident does not appoint an agent, the Commissioner may do so on behalf of the non-resident. The agent should ordinarily be resident in Uganda. The appointed agent is then responsible for all the VAT obligations of the non-resident and is jointly and severally liable for the payment of all taxes, fines, penalties and interest imposed on the non-resident under the VAT Act. Accounting for VAT on imported services continues to be the responsibility of the importer of the services where the services imported into Uganda are not covered by the above rules. Following the amendment of the VAT law in July 2011, VAT on imported services is no longer claimable as input VAT under the reverse VAT system. In other words, the recipient of the services is required to pay VAT at 18% to the URA but cannot claim it as input VAT. The VAT is therefore a cost to the importer of the services. |
Supply of electronic services With effect from 1 July 2018, the definition of electronic services was amended to include the following when provided or delivered remotely through:
Prior to this, the VAT Act restricted electronic services to those provided on or through a telecom network. The Uganda Revenue Authority (URA) issued a public notice on 20 October 2022 communicating that, effective 1 July 2022, non-resident suppliers of electronic services in Uganda were required to register and account for VAT on electronic services on a quarterly basis using an online platform accessible at https://www.ura.go.ug/. The public notice further guided that the quarterly VAT returns should be filed within 15 days from the end of every quarter of the financial year starting 1 July 2022. To register for VAT on electronic services, a non-resident is required to complete an online form, accessible at https://www.ura.go.ug/, with specific information regarding the business, after which a Tax Identification Number (TIN) is issued to the non-resident. The TIN is sent to the email address provided on registration. |
Application for registration In order to apply for VAT registration, one first has to obtain a tax identification number (TIN). Entities that are registering with the URA for the first time may register for all the different tax types at the same time. The application for VAT registration (both compulsory and voluntary registration) must be made through the company’s URA portal account. Application is made by amending the registration details on the portal which is then submitted to the URA. As part of the registration process, URA officers may conduct a visit to verify the business address and activity of the applicant. Once the applicant is registered, the Commissioner-General provides a certificate of registration, indicating the TIN and the effective date of registration. If registration is denied, the applicant is notified accordingly. |
Deregistration A taxable person may apply in writing to have their VAT registration cancelled in the following circumstances:
A voluntarily registered taxable person (with a turnover below the annual registration threshold) may apply for deregistration after the expiration of two years from the date of registration. The Commissioner-General may cancel the registration of a voluntarily registered taxable person where the person:
The Commissioner-General has to notify the taxable person of the cancellation of registration within 14 days of making the decision. The cancellation takes effect from the end of the tax period in which the registration is cancelled. Obligations and liabilities incurred by a taxable person before deregistration are not affected by the cancellation of the person’s registration. |
Output tax |
Calculation of output tax Output tax is calculated by applying the VAT fraction (18/118) to the VAT-inclusive value, or by applying the rate of 18% to the taxable value of the transaction. Where the taxable value is determined without a separate amount of the consideration being identified as VAT, it is assumed that the taxable value is inclusive of VAT. |
Exempt supplies Exempt supplies in respect of which the supplier should not charge input tax include (but are not limited to) the following supplies:
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Zero-rated supplies Supplies where VAT at the rate of 0% can be accounted for include (but are not limited to) the following (a supplier may claim input tax on these items):
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Input tax |
Input tax allowed Generally, VAT is recoverable on taxable supplies made to the taxable person during the tax period and on all imports of goods and services made by that person if they are directly related to taxable transactions of the taxable person and are supported by fiscalised invoices. A fiscalised invoice is an invoice that has been issued through the Electronic Fiscal Reporting and Invoicing System (EFRIS). EFRIS is an invoicing system used to manage the issuance of e-receipts and e-invoices of a taxable person. It was introduced on 1 July 2020 and was made compulsory on 1 January 2021. VAT is not recoverable on taxable supplies made to the taxable person on imports of goods or services made by that person if they are not for use in the business of the taxable person (for example where the goods and services are directly related to exempt transactions) and are not supported by fiscalised invoices. With effect from 1 November 2022, the VAT return was updated to only allow input VAT claims relating to electronic invoices issued in the respective tax period. A person who is dissatisfied with an assessment may lodge an objection with the Commissioner-General within 45 days after receipt of the notice of the assessment decision. |
Input tax expressly denied VAT incurred on the following supplies is specifically not allowed for input tax deduction:
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Partial exemption Where goods or services are acquired only partially for purposes of making taxable supplies, the taxable person can only claim a proportion of the VAT incurred on purchases during the tax period according to an apportionment formula B/C where:
If the apportionment percentage is less than 5%, no input tax may be credited for the period. If it is more than 95%, the full amount of input tax may be credited for the period. The standard alternative method (or the direct attribution method) allows a person to directly attribute input tax separately to the exempt and taxable supplies, and to claim for all the input tax related to the taxable supplies and for none of the input tax related to exempt supplies. The balance of input tax that cannot be directly attributed can be apportioned according to a given formula. This method, or any other method, may be used upon approval of the URA Commissioner-General. |
Preregistration and post-registration of VAT VAT incurred prior to registration as a taxable person can be recovered in respect of taxable supplies of goods where the supply or import was for use in the business of the taxable person, provided the goods are on hand at the date of registration and the supply or import occurred not more than six months prior to the date of registration. A taxable person whose registration has been cancelled is regarded as having made a taxable supply of all goods on hand, including capital goods, and will be liable for output tax on all the goods on which they have received input tax credit. The output tax payable will be based on the fair market value of the goods at the time of cancellation of registration. |
Withholding VAT With effect from 1 July 2019, VAT withholding provisions were reintroduced after their introduction and subsequent suspension in 2018. The provisions require a designated person to withhold 6% of the taxable value of a VATable supply when making a payment to a VAT registered taxpayer. It is also applicable for payments made to non-registered taxpayers who make a single supply whose taxable value is above the threshold (i.e. UGX 150m in a year or UGX 37.5m in a quarter) required for VAT registration. The list of designated withholding VAT agents is available on the URA portal. There is an exemption for compliant taxpayers that operates in a similar manner to the current WHT exemption list (i.e. based on an annual renewal conditional on good VAT compliance behaviour). This reduces the tax compliance burden and cash flow implications for payees. |
International trade |
Imported goods VAT on imports is payable on the date on which the imports are cleared under the customs clearance procedures. The taxable value is the total of:
Uganda is a signatory to the World Trade Organisation (WTO) agreement. The URA uses the valuation method of the WTO’s General Agreement on Tariffs and Trade (GATT), namely the transaction value method. The importer must produce documents for the transactions relating to the imports, and the values contained therein are used to determine the customs value. If the goods cannot be valued on the basis of the transaction value method, secondary bases may be used. |
Imported Services A registered taxpayer who receives a supply of services from a non-resident supplier must account for the VAT due on the supply at the earlier of the time:
The VAT payable is calculated by applying the VAT rate to the total consideration paid to the non-resident supplier. The recipient must account for VAT. VAT accounted for on imported services cannot be claimed as a credit due on the supply. Non-VAT-registered persons who are not covered by the new rules in place of supply of services must declare the VAT on imported services through the e-return, even though they are not specifically registered for VAT, but should have a TIN. VAT-registered persons account for VAT on imported services through the monthly VAT return (supported by e-invoices), alongside other transactions. An import of services is exempt if the services would have been exempt, had they been supplied in Uganda or be used in the provision of an exempt supply. |
Exports The supply of goods that are exported from Uganda is taxed at the zero rate. The zero rate will apply if:
Further, the Commissioner may require goods to be distinctively labelled by the exporting taxpayer. For an export transaction to qualify for zero-rating, a registered taxpayer should obtain and retain the prescribed documentary proof of export (see ‘Additional export documentation’ below). Where services are supplied by a registered person outside Uganda and satisfy the definition of place of supply as being outside Uganda, the services will qualify for zero-rating. The Act does not authorise any refunds to tourists or non-residents. |
Place, time and value of supply |
Place of supply of goods A supply of goods takes place in Uganda where the goods are delivered or made available in Uganda by the supplier, or if the delivery or making available involves transportation, if the goods are in Uganda when the transport commences. |
Time of supply The time of the supply (sale) of goods or services occurs:
In any other case, on the earlier of the date on which:
Input tax is claimed in the tax period in which the e-invoice or customs bill of entry and URA receipt are obtained from the supplier. For taxable persons on the cash basis, input tax is claimed when payment is made and the taxable person has evidence to certify it. |
Value of supply The taxable value of a taxable supply is the total consideration paid in money or kind by all persons for that supply. ‘Consideration’ in relation to a supply of goods or services means the total amount in money or kind paid or payable for a supply by any person, directly or indirectly, including any duties, levies, fees and charges paid or payable on, or by reason of, the supply other than VAT, reduced by any discounts or rebates allowed and accounted for at the time of the supply. The concepts ‘consideration’ and ‘value’ must be distinguished as follows:
The taxable value of a taxable supply of goods by way of an application for own use or a taxable supply for reduced consideration is the fair market value of the goods or services at the time the supply is made. The taxable value of a taxable supply of goods under a rental agreement is the amount of the rental payments due or received. |
VAT compliance |
Accounting basis and tax period Under the invoice basis, VAT is accounted for by using the formula (X – Y), where:
The cash basis applies to taxable persons whose annual taxable supplies do not exceed UGX200 million. Under this scheme, the taxable person accounts for VAT on the actual cash receipts and payments. |
Returns and payment of VAT VAT returns must be made monthly and filed within 15 days of the end of the tax period. The return purchases and sales should be made to match the purchases and sales that are within the taxpayer’s EFRIS reports. The filing of returns and payment of tax thereon are now done electronically. The VAT due must be paid within 15 days of the end of the tax period, i.e. when the return must be filed. A taxpayer has to register the payment on the electronic system with one of the approved banks, subsequent to which a payment can be made with the chosen bank. Payments above UGX20m have to be affected by electronic funds transfer. |
Interest and penalties The penalty for not filing a VAT return is the greater of UGX200,000 or the compounded interest rate of 2% per month for the period for which the return is outstanding. The penalty for late payment of VAT is calculated at a compound interest rate of 2% per month for the period during which the tax is unpaid. If a person knowingly or recklessly makes a statement or declaration to an officer of the tax authority that is false or misleading in a material manner and the resulting tax payable or refundable is different from the proper tax payable, the person is liable to pay double the amount of excess tax. Further, a person who claims a refund that is in excess of what is due during a tax period is liable to a penal tax equal to 100% of the excess. Where good cause is shown, in writing, by the person liable to pay a penal tax, other than a penal tax arising from the offence of late payment of tax, the Commissioner-General may waive the whole or part of the penal tax payable. Good cause could be a justifiable explanation of circumstances that caused the non-compliance. Where the non-compliance does not result in loss to the state or benefit to the taxpayer, the URA could allow the waiver of the penalties. This, however, will be at the authority’s discretion. Period is a period of one calendar month. |
Refunds Businesses that are in a regular repayment (zero-rated taxpayer) position will be refunded in cash. Cash refunds can be made to such businesses within one month following the due date or when the return was made. On the other hand, refunds can be made within ten days of lodging the claim under the customised fast truck (CFT) system for businesses whose services are not normally zero-rated. Taxpayers are subject to preliminary evaluations on a case-by-case basis before they qualify for the CFT. Where businesses are not in a regular repayment position and the refund is:
Where the URA fails to make a refund that has been applied for within one month, the URA will pay interest at a rate of 2% per month compounded on the amount of the refund. The taxpayer should have filed accurate declarations to the effect that the variance between the figures established by the URA and the declarations does not exceed UGX50,000. |
Objections and appeals A person who is dissatisfied with an assessment may lodge an objection with the Commissioner-General within 45 days after receipt of the notice of the assessment decision. Where a person is dissatisfied with the objection decision from the Commissioner-General, that person may lodge an application with the Tax Appeals Tribunal (TAT) for review of the objection within 30 days of having been served with the notice of the objection decision. Before lodging the application with the Tribunal, the person is required to pay the Commissioner-General 30% of the tax in dispute or that part of the tax assessed not in dispute, whichever is the greater. There is also the option to apply to the Alternative Dispute Resolution (ADR) team at the URA before going to the TAT. The team allows you to have another URA team examine the objection grounds that were disallowed by the objections team. This application does not freeze or extend the period within which to apply to TAT. As such, the practice has been to make the application for consideration with the ADR while applying to the TAT as well to avoid missing the deadline to apply to the TAT in case the ADR comes to a dissatisfactory conclusion. Where a person is dissatisfied with the decision of the Tax Tribunal, a notice of appeal may be lodged with the Registrar of the High Court within 30 days of being notified of the decision. An appeal to the High Court is always made on a question of law only. |
Time limits Where a person fails to lodge a return as required, or the URA is not satisfied with a lodged return, or the URA has reason to believe that a person will become liable to pay VAT but is unlikely to pay the amount due, an assessment will be issued within five years of the date on which the return was lodged by that person. An assessment may be issued any time where fraud or gross or wilful neglect has been committed by, or on behalf of, a person. A claim for output tax that has been over-paid must be made within three years after the end of the tax period in which VAT was overpaid. An application to alter a return can be made within three years after the date on which the return was lodged. |
VAT records |
Tax invoices Every taxable person must issue a fiscalised invoice to the recipient. There are four ways in which the invoice can be issued:
The issuance of fiscalised invoices can only be eased for the issuance of manual invoices where:
In this case, an invoice for VAT purposes should contain the following information:
If the reason for issuing a manual invoice is due to the system not being available, the manual invoice will have to be uploaded no later than 24-hours after the system has been restored. Otherwise, the manual invoice should be uploaded within 24 hours of its issuance. Invoicing may be done in a foreign currency but the returns have to be filed in Uganda Shillings. Where an amount is expressed in a currency other than Uganda Shillings, the amount must be converted into Uganda Shillings using the weighted average selling rates of the previous month for the currency concerned. The Bank of Uganda normally issues these rates at the beginning of every month. Tax invoices prepared by the principal may be passed to the agent for issue. The principal may also authorise the agent to issue tax invoices on their behalf. This authorisation must be in writing and must be retained by the agent. The authorisation commits the principal to meeting the VAT obligations resulting from the agent’s actions. |
Credit notes and debit notes A taxable person must issue a credit note or debit note in relation to a taxable supply by a taxable person in these circumstances:
A credit note is issued where the actual VAT chargeable is less than the amount on the tax invoice. A debit note is issued where actual VAT chargeable is more than the amount on the tax invoice. Similar to the tax invoice, a credit note should be issued by requesting one through the EFRIS platform and will only apply once it has been approved by the URA. |
Additional export documentation An e-invoice issued to a non-resident recipient generally shows tax at a zero rate. In order to qualify for zero-rating on exports, the supplier must also have the following:
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Record-keeping Currently, records must be kept for at least five years after the end of the tax period to which the records relate, including in the electronic format. Records should be maintained in the English language and may be accessed by the Commissioner-General or an authorised officer at any time during normal working hours. Records can be kept in another language or in a different currency on application and approval by the Commissioner-General. |
Specific VAT rules |
Bad debts Bad debt relief may be allowed by the Commissioner-General where:
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Land and buildings The supply of unimproved land is exempt from VAT. The letting and disposal of immovable property is exempt. However, the letting and disposal of commercial premises, hotel or holiday accommodation property for periods not exceeding three months, serviced apartments, or property for parking or storing vehicles are standard rated. In the case of building or construction services, VAT is payable when an e-invoice is issued or when payment is received or becomes due, whichever is the earlier, in respect of each stage of the work completed. Where an e-invoice or a claim for payment by a contractor requires certification (e.g., by an architect), the time of supply is the time of certification. Where a contractor varies the cost of a contract during the course of execution, the variations to the original contract are deemed to include VAT. |
Petroleum and mining operations The VAT Amendment Act of 2014 introduced a special regime for petroleum and mining operations. For example, the VAT law allows for voluntary VAT registration regardless of whether the following categories of persons are currently making taxable supplies:
There is also a special treatment for VAT on the supply of goods or services from a contractor to a licensee for exclusive use in mining or petroleum operations. The VAT on the supply is deemed to have been paid by the licensee to the contractor; the contractor does not account for the deemed VAT payment as output tax; and the licensee does not claim the deemed VAT payment as input tax. The rationale for the provision is to provide for VAT cash-flow neutrality in transactions between contractors and licensees. Contractors or licensees are able to claim an input tax credit for the reverse-charge VAT paid on imported services. This restores the position that used to apply up to 2011, although this does not apply to other taxable persons. In respect of tax refunds, where a licensee’s input credit exceeds its output liability for a tax period, the amount must either be refunded or (at the licensee’s option) carried forward and offset against a future liability. The Commissioner’s ability to unilaterally carry forward overpayments of less than USD5 million no longer applies to a licensee. |
Leasing In the case of a rental agreement (i.e. an agreement for the letting of goods, including a hire-purchase agreement or a finance lease), goods are treated as having been successively supplied for successive parts of the period of the agreement and each successive supply occurs on the earlier of the date on which payment is due or received. VAT is payable on the amount of rental payments due or received. The supply of goods under a finance lease is treated as a supply of a good under a rental agreement. The lessor may claim the input credit at inception of the finance lease and must charge VAT on the lease rentals (including the finance charge). The lessee, if registered for VAT, may claim an input tax credit. |
Promotional gifts The taxability of promotional gifts depends on the relationship between the supplier and the consumer. Where the supplier and consumer are related parties, then the giving of a promotional gift is regarded as a taxable supply of goods or services and VAT is therefore charged on the market value of such gifts. Where the supplier and consumer are not related parties, then the giving of a promotional gift is treated as a supply for zero consideration and therefore no VAT is charged. |
Second-hand goods There are no specific rules for second-hand goods. Sales made by a taxable person are subject to VAT. The export of second-hand goods is zero-rated in accordance with general rules. |
Small retailer scheme No special scheme is available for small retailers. |
Tourism industry The VAT consequences of supplies made by tour operators can be summarised as follows:
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Transfer of a business Transfer of a business (or a separate part thereof) as a going concern is exempt if the transferor and transferee are both taxable persons and both parties notify the Commissioner-General within 21 days of the transfer in writing of the details of the transfer. The same business should be maintained for two years after the transfer. |
Warranty repairs The importation of parts under the warranty agreement is subject to VAT at the standard rate of 18%. Services offered to foreign companies are considered exported services and are charged at the zero rate, provided the services are consumed outside Uganda subject to the place-of-supply rules. |
Other indirect taxes |
Import duties Import duties are taxes imposed on imported goods. There are different rates for COMESA (Common Market for East and Southern Africa) and for the rest of the world. The COMESA rates vary between 4% and 10%. For the rest of the world, the highest import duty is 25%. In addition, all goods coming into the East African Community, of which Uganda is a member, are subject to the three-tariff band (0%, 10% or 25%), depending on the origin of the goods. The East African Community member countries include Uganda, Kenya, Rwanda, Tanzania and Burundi. |
Infrastructure levy An infrastructure levy of 1.5% on selected imports was introduced into East Africa to finance railway infrastructure development. This is chargeable on all goods which have a customs external tariff (CET) that is not zero (0%). The levy is chargeable on the transaction value. |
Excise duties Excise duty is imposed on certain excisable goods as well as on selected imported products. These products largely include spirits, soft drinks, beer, wine, cigarettes and tobacco, fuel, motor vehicles, sugar, mineral water, petrol and diesel, cement, sugar, money transfer services, and luxury goods such as cosmetics and perfumes. The excise duty rates range from 0.5% to 200%. Excise duty is also levied on airtime and talk time. The rates are 12% for airtime on mobile cellular, landlines and public phones. |
Motor vehicle fees Fees are levied on the registration and transfer of ownership of motor vehicles. |
Stamp duty Stamp duties are charged on various legal documents and agreements such as:
Stamp duty is payable within 45 days of the execution of the instrument (if executed in Uganda) and within 30 days of being received in Uganda (if executed outside Uganda). |
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