Tax Question Recently a group of students in the U.S. held a fundraiser to buy a few items to be donated to a school in Uganda. They shipped them via the U.S. Postal sevice. The value of the donated items were approximately #200 US. When passing through customs in Uganda the package was held up and assessed various taxes amounting to almost 50% of the value.
Are small donations like this supposed to be subject to such hefty taxation? Is there some paperwork a Non-profit organization neede in order to be tax exempt or are all items treated the same? The school in the U.S. is interested in sending more school supplies but the taxation will prevent their ability to afford to make the donations.
Any assistance or advice would be greatly appreciated. I don't want to discourage the children from donating to help assist a school. Thanks, Mark
Thank you Mark for your question, well the Value Added Tax Act CAP 340 of the Laws of Uganda provides for a wide range of zero-rated and exempt goods and services. Some of these are exemptions on raw materials, plant and machinery, drugs, diapers, ambulances, scholastic materials, vehicles of specific tonnage and others.
The Act also has sector specific exemptions like those on provision of feasibility studies and consultancy services to contractors for roads, bridges and dams, exemptions on provision of medical, dental and nursing services and even on provision of educational materials and services.
The Agriculture, Health, Education and Manufacturing sectors enjoy a lot of exemptions and zero rating on imports. The Act exempts Diplomats who are classified as privileged persons and provides for fast tracking of VAT refunds for compliant tax payers.
Then according to The Value Added Tax Act (CAP. 349 of the Laws of Uganda), donations such as those are not included explaining that amount of tax levied on your goods.
All imports to Uganda are also subject additional Customs Duty (a % on Cost, Insurance and Freight) and Import Duty.