URA Sets Sh300m VAT Registration Threshold, Explains Tax Rules for Small Businesses

By Mulengera Reporters

Businesses in Uganda whose annual taxable turnover exceeds sh300m are required to register for Value Added Tax (VAT), Uganda Revenue Authority (URA) Commissioner General John Musinguzi Rujoki has said.

Musinguzi explained the requirement in a tax education column published in New Vision on Thursday, October 22, 2026, under Ask the Commissioner General, in which he outlined the tax obligations of newly registered businesses and the requirements applicable to small enterprises.

He said businesses must register with URA for the tax types applicable to their activities and account for their tax obligations in accordance with Uganda’s tax laws.

VAT-registered businesses are required to file their returns and remit any tax due by the 15th day of the month following the reporting period.

Musinguzi also clarified the circumstances under which businesses can claim input VAT on purchases, including packaging materials such as boxes and labels.

He said a business seeking to claim input VAT must be registered for VAT and possess a valid electronic invoice issued for the taxable supply of goods or services.

Eligible input VAT is claimed through the monthly VAT return. Taxpayers are therefore required to maintain proper records, ensure that claims are supported by valid electronic invoices and accurately declare qualifying input tax.

The guidance also addresses the tax obligations of smaller businesses, particularly those with relatively low turnover and limited profit margins.

Musinguzi said the law allows a resident taxpayer whose annual turnover does not exceed sh150m to elect to account for tax under the Presumptive Tax Regime, subject to the applicable legal provisions.

Under the regime, the tax payable is determined according to prescribed turnover thresholds and rates, with the applicable amount depending on the business’s gross turnover and, where relevant, whether it maintains records.

For businesses with annual turnover of up to sh10m, the published guidance provides for nil tax under the regime where the applicable conditions are met.

For businesses in higher turnover brackets, the tax is determined using the prescribed rates and thresholds. The published schedule provides different calculations for taxpayers with records and those without records.

However, Musinguzi cautioned that the Presumptive Tax Regime does not apply to certain categories of resident taxpayers.

These include those providing medical, dental, architectural, engineering, accounting, legal and other professional services, as well as taxpayers engaged in public entertainment, public utility and construction services.

He advised taxpayers to assess their eligibility and comply with the tax obligations applicable to their businesses.

Musinguzi further explained that entrepreneurs should take several steps after registering a business with the Uganda Registration Services Bureau (URSB), including registering with URA for the relevant tax types, maintaining accurate business records, filing required returns and paying taxes within the prescribed deadlines.

He said businesses that have already registered for taxes with URA do not ordinarily require additional tax registrations or accounts before commencing operations.

However, businesses registered for VAT and those operating in sectors gazetted for the use of the Electronic Fiscal Receipting and Invoicing Solution (EFRIS) are required to register for the system.

He also advised businesses to ensure their taxpayer profiles are up to date. Where a Taxpayer Identification Number has not been linked to the relevant Business Registration Number or National Identification Number, the taxpayer should update the information accordingly.

To support entrepreneurs, URA provides free tax education, online learning resources and practical training through its Tax Education Division.

The authority conducts taxpayer engagements, workshops, tax hubs and tax katale events across the country. It also publishes weekly tax education columns in New Vision and Bukedde, alongside radio and television programmes.

Musinguzi said tax education materials are available in 13 languages through the URA website, while taxpayers can seek assistance through URA offices and its official service channels.

The guidance highlights the importance of understanding VAT registration requirements, determining eligibility for the Presumptive Tax Regime and keeping accurate records to support tax declarations and compliance. (For comments on this story, get back to us on 0705579994 [WhatsApp line], 0779411734 & 041 4674611 or email us at mulengeranews@gmail.com).