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URA exempts VAT from exported drugs and medicines

Locally manufactured drugs being sold in pharmacies will now become cheaper following this new development,

KAMPALA- The Uganda Revenue Authority (URA) has on Friday July 5 exempted supply of drugs and medicines not manufactured in Uganda from Value Added Tax (VAT) in a bid to ensure availability of affordable drugs other than those manufactured in Uganda in the financial year 2019/2020.

In a letter dated July 1, 2019 URA said government’s efforts have a preferential treatment to locally manufactured medicine made the supply of drugs and medicines manufactured in Uganda zero-rated.

“Effective July 1 2019, all pharmacies and drug shops dealing in medicines manufactured in Uganda will charge VAT at a rate of zero. This means that such pharmacies and drug shops that are registered for VAT will be able to claim VAT that they have incurred on such supplies,” reads the statement in part.

URA added that no VAT will be charged or claimed by pharmacies and drug shops dealing in imported medicine and drugs.

The presence of the scanner in Busia has helped URA collect at-least 1.8 billion n taxes for concealed items. (PHOTO/PML Daily)Paragraph 1(c) of the third schedule VAT Act provides that the supply of drugs and medicines is zero-rated supply. However, drugs and medicines are not defined.

The definition of medicines and drugs does not include preparations commonly used for toilet purposes, or in connection with care of the human body, whether for cleansing, deodorizing, beautifying, preserving or restoring whether or not possessing therapeutic or prophylactic properties like medicated soaps, shampoos, toothbrushes, dental pastes and creams, facial and body creams, hair removing creams, aromatherapy oils, mouth washes, lip balms, deodorants, antiperspirants, disinfectants.

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