local or public authority or body which carries on business activities or intending to carry on business activities is required to apply to be registered for VAT regardless of the turnover What does one need to consider before registering? Registration for VAT can happen under two circumstances i.e when a person applies voluntarily or compulsorily Voluntary Registration The Commissioner General shall register a person who applies for registration voluntarily and issue to that person a certificate of registration (TIN) unless the Commissioner General is satisfied that; a) the person has no fixed place of abode or business; or b) the Commissioner General has reasonable grounds to believe that that person: x Will not keep proper accounting records relating to any business activity carried on by that person; x Will not submit regular and reliable tax returns; or x Is not a fit and proper person to be registered Administratively, the Commissioner General may also not grant registration if a person x Has no bank account x Has previously been registered for VAT purposes but failed to perform his duties under the VAT law Compulsory Registration If during the past 3 calendar months one made taxable supplies whose gross value, exclusive of VAT exceeded Shs. 37.5 million then one has to register for VAT immediately. Or, if one reasonably expects that during the next 3 calendar months the total value of your taxable supplies is likely to exceed Shs.37.5 million then one must register for VAT. Remember that even if one doesn't qualify to register at present, and in future their taxable turnover increases to the level mentioned above, one will be required by law to register at that point.
How does one calculate turnover? Turnover is calculated on an ongoing basis. Two periods should be considered - the past 3 calendar months and the next 3 calendar months (consecutive months). One should ascertain at the end of each calendar month the total value of taxable goods and services supplied for the past 3 months. Where the total exceeds Shs 37. 5 million a person is required to register for VAT. Or If after estimating the total value of supplies for the next 3 months one expect your turnover to exceed Shs 37. 5 million then you are required to register. 5
Can one be registered if turnover is below the threshold/limit? Yes, if the taxable turnover is below the 37. 5 million limits in any 3 calendar months of business activity, one may apply for voluntary registration. However, one will have to satisfy the Commissioner General that they have a fixed place abode, are able to keep proper records and are fit and proper person Voluntary registration is at the discretion of the Commissioner General. In case one's application is rejected, they will be notified the reasons for the refusal given.
How does one account for VAT if value of supply is not clear? VAT on any goods or services where value is not clearly defined should be accounted for basing on the fair market value at the time the supply is made; e.g. barter trade, gifts, own use.
What are the obligations after VAT registration? x Charge and collect VAT on supplies by issuing a Tax Invoice. Currently this all VAT registered taxpayers are required to enroll for the Electronic Fiscal Receipting and Invoicing Solution - EFRIS and issue invoices and receipts online x File a VAT return within 15 Days after the end of the month x Pay VAT due as assessed in ones return within 15 days after the end of the month. Currently when the return is files the return, the pay slip is automatically generated x Maintain Proper Records x Avoid making reckless, false and misleading statements Benefits of VAT registration x Being in position to supply large and or credible business which leads to more profits and growth x Avoiding inconveniences arising from unfair assessments x Avoiding offences related to VAT registration, return filing and failure to pay
