VAT QUESTIONS
Question 1
XYZ Ltd, a VAT registered business in Uganda, had the following transactions during the month
of March. The VAT rate is 18%.
1) Purchased raw materials worth Shs.2,000,000 (exclusive of VAT)
2) Paid rent for office space of Shs.3,540,000 (VAT inclusive)
3) Sold finished goods to customers for Shs.15,000,000 (exclusive of VAT)
4) Provided VAT-exempt services worth Shs.5,000,000 to a non-profit organization.
5) Purchased machinery for production costing Shs.7,080,000 (VAT-inclusive)
6) Imported raw materials valued at Shs.4,000,000 (exclusive of VAT)
7) Received a government grant of Shs.3,000,000 (VAT is not applicable)
8) Sold scrap materials for Shs.1,200,000 (exclusive of VAT)
9) Paid electricity bills amounting to Shs.590,000 (VAT-inclusive).
10) Purchased stationery for office use costing Shs.1,180,000 (VAT-inclusive)
Required:
a) Calculate the input VAT for all applicable purchases.
b) Calculate the output VAT for all applicable sales.
c) Determine the net VAT payable or refundable for the month of March
Question 2
Mondi operates three big supermarkets in India under the name ‘Quick Save’. He opened a
supermarket in Uganda located in the suburbs of Kampala in Ntinda. They deal in multiple goods
and services. Mondi was registered for VAT effective 1 st January, 2024 and deals with VAT
registered taxpayers only. During the month of January, 2024 Mondi presented to you a
summary of his transactions as follows:
Purchases (VAT inclusive where applicable)
Date Transaction Shs ‘000’
1 Purchased sugar 25,000
Purchased Bananas 11,500
Purchased exercise books 24,500
Purchased laptop computers 35,000
12 Installed CCTV in the supermarket 30,000
15 Purchased insecticides 11,000
Purchased baking powder 12,500
25 Prepaid rent for 6 months 15,000
Sales (VAT exclusive where applicable)
Date Transaction Shs ‘000’
6 Sold sugar 12,000
7 Sold bananas 1,100
Sold exercise books 2,500
8 Sold 5 laptop computers 5,000
12 Sold sugar to Mukasa who promised to pay by 31st 2,100
January.
20 Sold insecticides 3,300
Required:
a) Advise Mondi on the:
i. VAT payable or claimable for the month of January, 2024
ii. VAT treatment of transaction where Mukasa, one of his major clients bought sugar Shs.
2,100,00 and promised to pay by 31st January 2024 but failed to fulfil his promise (VAT
on bad debts)
iii. Differences between cash and accrual method of accounting
b) Mondi would like to link his point of sales server to one of the branches based on India. His
information technology (IT) expert based in India has advised him that with his concept, he
can monitor the sales from the Ugandan branch even when he travels to India. The estimated
prices for this service is Shs. 25,000,000. The IT expert has indicated that he can do this job
without necessarily coming to Uganda. Advise Mondi on the VAT implications of this
transaction.
Question 3
Birunga Enterprises Ltd deals in mixed supplies and is registered for VAT. Some of their
products are imported while others are locally sourced. The company uses the standard method
of apportionment to claim input VAT. The company had the following transactions during the
month of January, 2024: Sales/ Receipts (VAT Inclusive where applicable):
Shs ‘000’
Sugar 25,500
Beer 86,000
Soda 10,000
Salt 3,000
Mosquito nets 17,000
Solar water heaters 115,000
Hoes 17,000
Fertilizers 60,000
Receipts from passenger transportation 17,000
Total 350,500
Purchases/ payments (VAT exclusive where applicable):
1) Imported a Toyota Hiace Omnibus at Shs 50,000,000 to engage in the passenger transport
business between Kampala and Jinja and also bought 4 new tyres for Shs 1,200,000.
2) Imported solar water heaters at Shs 20,000,000.
3) Fuel for the omnibus Shs 10,000,000.
4) Paid electricity bills Shs 500,000.
5) Paid telephone services Shs 200,000.
6) Bought 20 bags of sugar at Shs 4,000,000.
7) Bought salt Shs 1,000,000.
8) Bought fertilizers Shs 10,000,000.
Required:
a) Advise the company on the VAT payable or claimable for the month of January, 2024.
b) Explain the circumstances when a person does not qualify for input tax credit in respect of a
taxable supply or import.
