Mr. Daniel Birungi, the Executive director says that UMA is in discussions with relevant stakeholders to ensure that VAT withholding tax is properly planned and implemented once reinstated.
In the recent budget a number of tax laws were amended through a Legal Notice No. 12 of 2018 issued by the Minister of Finance Planning and Economic Development pursuant to Section 5 (2) of the VAT Act introduced the concept of 18% VAT withholding by designated agents/Tax Payers.
Barely a month into its implementation, the Chairman UMA, Ms. Barbara Mulwana, Mr. Richard Mubiru, and UMA Policy team wrote a letter to the Finance Miniser and the Commissioner General, URA protesting the VAT withholding tax citing its ill-planned implementation.
In his response, Hon. Matia Kasaija acknowledged the difficulty that the VAT Witholding had impeached on the businesses also requested Ms. Akol to liaise with the Office of the Solicitor General to effect the recall and prepare an appropriate notice of withholding agents to operationalise section 3 of the VAT amendment Act 2018 and to propose appropriate amendments to the measure in consultation with all relevant stakeholders.
It is however important to note that the the withholding VAT law still stands and will only be activated once the Minister re-appoints agents. On a lighternote, the Minister, noted that chances of reinstating the mechanism would be very minimal.
Ernst & Young through their Indirect Tax Alert dated 3rd October, advised that taxpayers whose VAT amounts were withheld during the time that the scheme was operational (1 July 2018 - 20 September 2018) ensure that these amounts are creditable VAT within their VAT returns in order to prevent double payment of taxes.