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02 February 2018 Uganda issues public notices on consolidating VAT sales and use of improper tax invoices The Ugandan Government issued Public Notices in January 2018 to address the preservation of the Value Added Tax (VAT) self-policing mechanism/audit trail and to prevent VAT fraud.
The Uganda Revenue Authority (URA) has established a 90 day grace period from 1 January 2018 to 31 March 2018 for taxpayers to verify their business records and correct any irregularities in their VAT reporting without incurring penalties. The URA is concerned that a number of taxpayers are consolidating declarations relating to sales in their VAT return. These are often declared in the VAT returns under sales without Tax Identification Numbers (TINs), even for sales that were made to registered active taxpayers. This practice by taxpayers undermines the VAT audit trail because the input tax claimed by the VAT-registered customers that were declared under customers without TINs cannot be tracked as output tax in the VAT returns of their suppliers. Taxpayers have therefore been warned that they are required to declare sales appropriately in their monthly VAT returns by correctly filling in schedule 1 of the VAT return and that VAT sales should only be consolidated for cases where a sale has been made to a non VAT-registered person or final consumer who will not be claiming any input tax. In order to facilitate the processing of VAT refund claims, the following categories of taxpayers have been reminded to ensure that their suppliers (Hotels, Restaurants, Telecom Companies, Health Clubs, and Supermarkets) and service providers such as Electricity provider (UMEME) and National Water and Sewerage Cooperation (NWSC), among others, provide their correct registration details particularly; a Tax Identification Number (TIN) and the full name as per their identity card or the official name registered with the URA:
The URA also noted that a number of taxpayers have been applying for VAT refund claims without providing proper tax invoices with the claim as proof of payment of tax, supported by authentic evidence of the delivery of goods and/or services. The general public, particularly VAT refund claimants, were asked to insist that the supplier issue to them the proper Tax Invoices and Delivery Notes for transactions in taxable supplies. The above categories of customers were reminded that they have the right to suspend dealings with suppliers who fail to adhere to the above requirements. In this regard, the URA pledged to provide support in following up with and where necessary to provide information on such noncompliant suppliers. The URA noted that they are aware of a cross-section of VAT-registered taxpayers who have obtained fake invoices, which are then incorporated in their business purchases. This is done to reduce their legitimate VAT payments. The fake invoices are generated to portray a non-genuine business transaction. In reality, there is no supply or movement of goods and services.
As noted above, the URA has granted a 90-day grace period running from 1 January 2018 to 31 March 2018 for taxpayers to verify their business records and correct any irregularities in their VAT returns to avoid penalties. Taxpayers who do not comply will be investigated and could be prosecuted.
Document ID: 2018-5245 |
