International VAT Guide – Uganda
VAT rates in Uganda
How much is VAT in Uganda?
The Standard VAT Rate in Uganda is 18%.
There are no VAT-reduced rates in Uganda.
Some supplies are exempt from VAT. In this group of VAT-exempted sales, we can find the supply of petroleum fuels, social welfare services, educational services, and passenger transportation services.
Uganda VAT Rate | Rate Type | Coverage and imposition |
18% | Standard Rate | This applies to all taxable supplies in the country besides those that can benefit from being zero-rated or VAT-exempted |
0% | Zero Rate | Exports; Supply of medicines and drugs manufactured in the country; Supply of home-grown cereals |
The exact list of taxable transactions and allocated Uganda VAT rate can be found in VAT Uganda regulations.
VAT threshold in Uganda
A person who carries out economic activity or intends to carry one is required to register for VAT if the taxable turnover for three consecutive calendar months is above UGX 37.5 million. The annual VAT threshold in Uganda is UGX 150 million.
The VAT Act, Tax Procedures Code, and implementing regulations are the foundations of indirect taxation in Uganda. This legislation is essential for establishing the VAT Uganda regulatory landscape.
VAT registration threshold for resident businesses: Annual threshold of UGX 150 million
VAT registration threshold for non-resident businesses: In most cases, there is no registration threshold for foreign companies with a permanent establishment in the country.
VAT registration threshold for foreign providers of digital services: No threshold
VAT Taxable Activities in Uganda
Before discussing what types of business activities are taxable according to the VAT Act, let’s summarize who can be treated as a taxable person under VAT rules. A taxable person is a person who is registered for VAT or who should be registered for VAT.
Types of taxable activities that mandate the VAT registration:
- Supply of goods for consideration;
- Sales from vending machines;
- Exports;
- Imports;
- Supply of digital services.
The above-indicated categories of taxable activities are determined in general terms. For other connected forms of taxable activities where the economic operator is obliged to impose Uganda VAT, the concerned supplier should evaluate domestic regulations in more detail.
Tax Representative in Uganda
The necessity to acquire the services of the fiscal representative varies depending on the type of registration the foreign provider should follow.
Tax registration
Standard Registration
As mentioned, the person surpassing the quarterly or annual registration threshold should submit the registration application to the respective tax authority. Registration can be done online or in the tax office.
The interested person can also submit a request for voluntary registration.
Simplified tax registration
Foreign providers of digital services should register for Uganda VAT if they exceed the stipulated registration threshold. The Uganda Revenue Authority has established a simplified online registration procedure to make the registration procedure less challenging for non-resident service providers.
VAT on Electronically Supplied Services in Uganda
Digital Services
Foreign providers of electronically supplied services should register for VAT in Uganda and charge an adequate VAT rate for their supplies.
How much is VAT in Uganda for Electronically Supplied Services?
VAT rate Uganda: A standard VAT rate of 18% is applied in most cases on sales of Electronically Supplied Services in Uganda
Example of taxable ESS in Uganda ↓ |
Supply of digital products, such as software, connected changes, and updates of the software |
Services that can be downloaded through the internet and saved on computer and/or mobile devices |
Supply of music, films, and games, including games of chance and gambling games Services that are ordered online but delivered in a physical location (e.g., short-term accommodation, rental of transport services). For example, the services are supplied through the online digital platforms set up by the foreign entity and used at a physical location in Uganda. |
Supply of distance learning |
Access or download of music to a physical device |
Access or downloading of images, jingles, films, ringtones, and other audio output |
Digital Services Tax
Following the global trend of introducing direct taxes based on the income that non-resident digital service providers make from sources within the destination country, Uganda has imposed a Digital Services Tax from July 2023.
Digital Services Tax is a type of direct income tax imposed on the income foreign providers of electronic services(digital suppliers or platforms) make from their supplies to local customers.
Gross revenue tax in Uganda is 5% of the annual income these providers make.
Service providers that are in the scope of this income-based tax should register for DST, submit quarterly-based returns, and make the respective payments. This type of return and related tax payment shouldn’t be mixed with the VAT return that non-resident providers of digital services should submit.
Invoicing Rules
The Uganda Revenue Authority is diligently working on digitizing its tax services. The willingness to improve the effectiveness of the tax reporting and monitoring systems is seen in the ranks of digital tax reporting.
The VAT Act states that all VAT-registered taxpayers are covered by digital reporting based on e-invoicing. Transactions in the scope of the e-invoicing are B2B, B2C, and B2G. The VAT-registered taxpayers should issue an e-invoice or e-receipt for their transactions. They are also obliged to report the transactional data of the accounting documents digitally.
In most cases, non-resident suppliers of digital services aren’t obliged to issue e-invoices or e-receipts for their B2C transactions; instead, a simplified tax invoice is enough.
Invoice Requirements in Uganda
The simplified tax invoice should contain at least the following:
General information:
- Date of invoice issuance;
- Unique invoice number and series.
Seller information:
- Company name;
- Full address (head office);
- Billing address if different from company address;
- VAT number.
Customer information:
- Name;
- Full address;
- VAT number (if applicable);
Fiscal Information:
- Description and breakdown of the goods or services – quantity, discounts, unit price, excl. VAT;
- VAT amount;
- Invoice Total.
Foreign Currency Invoice in Uganda
In Uganda, it’s permissible to issue tax invoices in foreign currencies, but the VAT amount on the invoice and sales amount should be converted to local currency.
VAT Return in Uganda
Standard Return
Taxable persons not eligible for the simplified return filing should follow the general VAT and accounting rules regarding tax reporting. Most taxable persons should submit a return on a quarterly reporting basis.
The return should be submitted by the 15th day following the end of the reporting period, and the payment of owed tax should be handled before submission.
The submission of the return can be done on paper or electronically.
Simplified Uganda VAT Return
VAT Return Name | Quarterly VAT Return for Non-Resident Service Providers |
Filling frequency | Quarterly |
Online Filling | Possible |
Annual Return | No |
Filing deadline | 15th following the reporting period |
Payment deadline | Before submission of the return |
Payment currency | UGX |
Language | English |
Local VAT acronym | VAT |
Penalties for late reporting and omitted declarations
If a taxable person makes a late payment, late registration, or erroneous declaration, different types of penalties could be assessed against the non-compliant taxable person.
Various forms of penalties related to VAT:
Failure to apply for registration – A fine not exceeding UGX 3 million or imprisonment not exceeding six years or both on conviction if the failure to register was done knowingly or recklessly.
A fine not exceeding UGX 1 million or imprisonment not exceeding two years or both on conviction in any other case. A person who fails to register when required is liable to pay a penal tax equal to double the amount of tax payable during the period they remain unregistered.
Failure to submit a return in due date – A fine not exceeding UGX 2 million or imprisonment not exceeding six years or both on conviction.
Failure to pay tax on the due date – Penal tax on unpaid tax at a rate of 2% compounded.
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