URA head offices in Nakawa
An amendment to VAT Section 45 A will give taxpayers an opportunity to recoup 5% of the money they pay in taxes to the Uganda Revenue Authority (URA).
A tax refund of 5% of the VAT amount is to be paid back to consumers who purchase goods or services from a taxable person and is issued with an electronic receipt or invoice worth Shs5M within a consecutive period of thirty days.
This was revealed by Hafsa Seguya, a Tax Officer at URA during a recent URA TV ‘Tax Mchuzi’ webinar.
Seguya urged taxpayers to insist on e-receipts from suppliers.
She added that the 5% refund is only applicable to non-VAT registered URA clients, and that the rebate is paid only after 3 months.
This move (rebate), Seguya noted, is aimed at putting the Electronic Fiscal Receipting and Invoicing System (EFRIS) at the forefront of all payments to URA.
The above issue was just part of the discussion on the taxation of Non-Governmental Organizations (NGOs).
Seguya and her host, Arthur Akol, a Tax Literacy Officer revealed how NGOs are taxed.
Seguya explained that an NGO must register with the URA and be issued a Tax Identification Number (TIN).
The requirements for registration, she said, are a certificate of registration from the NGO Bureau and a copy of the constitution governing the NGO.
At this stage, she said, the NGO cannot be exempted. The exemption, she says, can only come after a period of 3 years. During this time, URA is monitoring activities of the NGO, its directors and office bearers.
“At registration, we give you a TIN and we expect you to abide by the requirements in the TIN,” she said.
Over the 3-year period, Seguya said directors of the company must be filing returns from whichever businesses they run outside the NGO and also remit Pay As You Earn (PAYE) for the workers.
“You have to be on our register whether you are an NGO or not,” she clarified.
Still, over the 3-year period, the NGO must declare who their landlords are, their location, amount they pay in rent per month and their TIN.
“Without these, it’s incomplete information,” she explainsed adding that NGOs can pay taxes through goods and services.
For instance, they can withhold 6% tax of whichever goods or services they procure but this also means that the service provider must possess an active TIN. These goods and services, Seguya explained, can be rent, stationary and professional fees among others for as long as the cost goes beyond Shs1 million.
Seguya said that ‘clever’ taxpayers break the payments into three to dodge the withholding tax. However, she explained that URA aggregates the payment and therefore, whether the supplies were paid in 3 installments or not, a taxpayer must meet their obligation.
“Once we discover that this is a supply that should have been done in one go but you broke it down to avoid taxes, there is no dodging; you must pay,” she said. But for proof of these payments, Seguya insists that they must be over a fiscalised invoice.
After 3 years, she said, an NGO can apply for an exemption and the request will be put to verification. But even if the NGO is exempted, Seguya said that if the said NGO owns rental units or a restaurant where it makes income from, the side businesses are not exempted.
