Govt to collect VAT on donated goods, services

Parliament has passed into law the Value Added Tax Amendment Bill 2024 giving the Government powers to collect VAT on donated goods or services given by an employer to an employee.

Government had argued that employers had been abusing the provision by using it as an avenue to give free taxable goods to their employees without consideration but claim input credit for the goods supplied, arguing that this was an abuse of the law since the Uganda Revenue Authority (URA) on the other hand cannot recover output VAT.

The Opposition in the minority report had described such a move as inhumane, saying it would discourage companies from making donations.

"Government should not be greedy; you are already overtaxing fuel. Why do you turn it into a soft target for tax increment? A minister whose fuel is bought by the taxpayer must not increase taxes on fuel unnecessarily. May be we should stop fueling all government vehicles for the leaders to understand the pain that citizens go through. Despite being fully aware of the adverse effects of escalating oil prices on both production costs and individuals' disposable income, this Government under President Museveni continues to burden its citizens with exorbitant taxes on fuel,” Kiira Municipality MP Ibrahim Ssemujju submitted.

Ssemujju also pleaded with Parliament to reject the proposal by Government to introduce a levy of sh500 per 50 kg of Lime, adhesive and Grout, saying such a move would likely exacerbate the current 2.5 million housing deficit in the country, which would be contrary to Government policy of providing decent and affordable housing in Uganda.

“Obviously when you increase taxes on building materials, you are increasing the cost of construction. This may discourage investment in this sector or may make renting very expensive. Again we plead with this government not to look at one side of revenue enhancement but also look at the plight of its citizens,” Ssemujju said.