Brief Facts:
The Applicant provides consultancy services for donor-funded projects. The Applicant charges a management service fee of 5% of the costs for the donor-funded projects.
On May 15th, 2019, the Applicant applied for VAT registration, which was rejected by the Respondent on July 4th, 2019. The Respondent registered the Applicant for VAT effective July 1st, 2016 and issued it with an assessment for the financial years June 2017 to 2019. The Applicant objected to the assessment on the basis that, prior to June 2019, it was not eligible for registration.
Issues for Determination:
- Whether the Applicant is liable to pay the VAT assessed?
- What remedies are available?
Tax Appeals Tribunal Decision:
- The financial statements for the year ended June 30th, 2018, show that the Applicant received management fees (income) totalling UGX 207,014,305. For the financial year 2019, the Applicant received management fees of UGX 840,066,000.
- The incomes in both years exceed the annual threshold and therefore indicate that the Applicant ought to have registered for VAT. The duty to register for VAT arises within 20 days after three months when the average threshold to register for VAT is exceeded.
The Applicant ought to pay VAT of UGX 124,390,983, which was the amount in the assessments.
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