in any law imposing such duties or taxes.
45 These incentives do not set prerequisites
for local and foreign investment but rather encourage and boost investment in
Agriculture by both local and foreign investors in accordance with the code.
2.9 Taxation in the Agricultural Sector
The Agricultural sector is subjected to taxation. Under Section 35 of the Income Tax
Act Cap 340, a person carrying on the business of horticulture in Uganda to produce
income included in the gross income and such person that has incurred expenditure
of a capital nature on the acquisition or establishment of a horticultural plant or the
construction of a greenhouse shall be allowed a deduction of an amount equal to
twenty percent of the amount of expenditure in the year of income in which the
expenditure was incurred and in the following four years of income in which the
plant or greenhouse is used in the business of horticulture carried on by the person.
The Value added tax (VAT) Act, Cap 349 is a tax on consumption which is
imposed on the supply of goods and services (taxable supplies) made by a taxable
person other than exempt supplies and imports other than exempt imports.
46 Under
the Act the standard rate of VAT is 18%. The Act provides for the following tax
incentives essential for agricultural investment.
Under Section 19 of the Value Added Tax Act Cap 349, provision is made for
exempt supplies which are listed in the second schedule to the Act. These exempt
supplies include the supply of livestock, unprocessed foodstuffs and unprocessed
agricultural products except wheat grain. They further include the supply of unimproved land, veterinary services and the supply of machinery, tools and implements
suitable for use only in agriculture.
Such tools include knapsack sprayers, ox ploughs, drinkers and feeders for
chicken, agricultural tractors (including walking tractors), disk harrows, cultivators,
ploughs, weeders, seeders, planters, subsoilers, seed drills, threshers, bale wrappers,
milking machinery, milk coolers, maize mills, wheat flour mills, homogenizers,
dairy machinery, grain cleaners and sorters, feed grinders hatcheries and implements
used for artificial insemination in animals. Section 24 of the Value Added Tax Act
Cap 349 makes provisions for zero rated supplies listed in the third schedule. These
include the supply of seeds, fertilizers, pesticides and hoes.
VAT exempt supplies under the second schedule to the Act include:
• Supply of livestock, unprocessed foodstuffs and unprocessed agriculture products
except wheat grain;
• Supply of unimproved land; and
45 Section 25 of the Investment Code Act.
46 Uganda Revenue Authority (2013).
76
E. Kasimbazi
45 These incentives do not set prerequisites
for local and foreign investment but rather encourage and boost investment in
Agriculture by both local and foreign investors in accordance with the code.
2.9 Taxation in the Agricultural Sector
The Agricultural sector is subjected to taxation. Under Section 35 of the Income Tax
Act Cap 340, a person carrying on the business of horticulture in Uganda to produce
income included in the gross income and such person that has incurred expenditure
of a capital nature on the acquisition or establishment of a horticultural plant or the
construction of a greenhouse shall be allowed a deduction of an amount equal to
twenty percent of the amount of expenditure in the year of income in which the
expenditure was incurred and in the following four years of income in which the
plant or greenhouse is used in the business of horticulture carried on by the person.
The Value added tax (VAT) Act, Cap 349 is a tax on consumption which is
imposed on the supply of goods and services (taxable supplies) made by a taxable
person other than exempt supplies and imports other than exempt imports.
46 Under
the Act the standard rate of VAT is 18%. The Act provides for the following tax
incentives essential for agricultural investment.
Under Section 19 of the Value Added Tax Act Cap 349, provision is made for
exempt supplies which are listed in the second schedule to the Act. These exempt
supplies include the supply of livestock, unprocessed foodstuffs and unprocessed
agricultural products except wheat grain. They further include the supply of unimproved land, veterinary services and the supply of machinery, tools and implements
suitable for use only in agriculture.
Such tools include knapsack sprayers, ox ploughs, drinkers and feeders for
chicken, agricultural tractors (including walking tractors), disk harrows, cultivators,
ploughs, weeders, seeders, planters, subsoilers, seed drills, threshers, bale wrappers,
milking machinery, milk coolers, maize mills, wheat flour mills, homogenizers,
dairy machinery, grain cleaners and sorters, feed grinders hatcheries and implements
used for artificial insemination in animals. Section 24 of the Value Added Tax Act
Cap 349 makes provisions for zero rated supplies listed in the third schedule. These
include the supply of seeds, fertilizers, pesticides and hoes.
VAT exempt supplies under the second schedule to the Act include:
• Supply of livestock, unprocessed foodstuffs and unprocessed agriculture products
except wheat grain;
• Supply of unimproved land; and
45 Section 25 of the Investment Code Act.
46 Uganda Revenue Authority (2013).
76
E. Kasimbazi