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Here’s Category Of Taxpayers To Be Exempted From VAT In 2020/21

Government through  Ministry of Finance, Planning and Economic Development has tabled before Parliament a category  of taxpayers lined up to receive tax exemption in payment of Value Added Tax (VAT) in 2020/2021.

The list is contained in the five bills tabled by Finance Minister, Matia Kasaija (pictured) last week.

The Bills include; Excise Duty Amendment bill 2020, Value Added Tax bill 2020, Income Tax Amendment bill 2020, Stamp Duty Amendment Bill 2020 and Appropriation Bill 2020.

Government in the Value Added Tax Amendment Bill 2020 seeks to amend the Value Added Tax Act, Cap. 349;to restrict a taxable person from claiming input tax credit in respect  of specific construction of commercial building; to exempt Islamic  Development Bank from tax; to re require an owner of a commercial  building to account for tax for each building separately; to provide for  exemptions from tax for specified supplies and other related matters.

Government has proposed to make amendments to the Value Added Tax Act, Cap. 349 to require an owner of more than one commercial building to account for tax for each commercial building separately and shall not claim tax credits on inputs used in the construction of an incomplete building against the tax collected from a completed commercial building.

The Value Added Tax (Amendment) Bill 2019 also listed some of the tax payers and goods to benefit from VAT and these include; trailer for agricultural purposes; combine harvesters.

Contractors and consultancy firms in the business of supplying services to conduct a feasibility study and design will not be required to pay VAT.

Others include; the suppliers of locally produced materials for the construction of a factory or a warehouse and the supply of locally produced raw materials and inputs or machinery or equipment.

The Investors are set to eat big especially those operating within an industrial park, free zone or any other person carrying on business outside the industrial park or free zone and whose investment capital is at least ten million  United States Dollars in the case of a foreigner or one million United States Dollars in the case of a citizen for ten.

However, not every investor will benefit from this VAT tax exemption unless if they use at least fifty percent of locally sourced raw materials and employs at least one hundred citizens and processes agricultural goods; manufactures or assembles medical appliances, medical sundries or pharmaceuticals, building materials, automobile, house hold appliances.

The other investors to benefit from this VAT tax exemption include; manufactures furniture, pulp, paper, printing and publishing of instructional materials.

Anyone seeking to establish or operate vocational or technical institutes; carries on business in logistics and ware housing, information technology or 

commercial farming; o rthe manufacture of tyres, footwear, mattress or  toothpaste won’t pay VAT.

The other groups of tax payers to benefit from VAT tax exemption include; suppliers of digital stamps for purposes implementing tax verification, quality and safety system; suppliers of cotton seed cake.

Tax payers dealing in software and equipment installation services to manufactures; services incidental to tele-medical services; andbroyalties paid in respect of agricultural technologies; the supply of accommodation in tourist hotels and lodges located up-country; the supply of liquefied gas; and the suppliers of processed milk will not pay VAT in 2020/2021.

Speaker Rebecca Kadaga forwarded the bills to the Finance Committee for scrutiny before Parliament makes a final decision.

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