Value Added Tax exemptions are provided for under Section 6 of The Value Added Tax Act, Cap. 148 “The Act”. Generally, the Act provides that, supplies or persons shall not be exempted from paying VAT unless provided by the Act or Schedule to the Act. However, the Act empowers the Minister (Minister responsible for Finance) to grant VAT exemption on imports by a Government entity or supply to a Government entity of goods or services to be used solely for-
- Relief of natural calamity or disaster.
- Implementation of a project funded by the Government, Government Loans or Grants
Project funded by Government eligible for Minister’s exemption means a project financed by the Government in respect of transport, water, gas or power infrastructure; buildings for provision of health or education services to the public; or a center for persons with disabilities.
For the purpose of part b) above, the loan or grant agreements must provide for VAT exemption on such goods or services in order to qualify for exemption. All VAT exemptions to Government entities shall be provided by order published in the Gazette. An exemption order shall specify goods or services that are eligible for exemption, commencement and expiry date of the exemption.
Goods or services whose VAT exemption is provided for by the Schedule to the Act, shall be imported or supplied to the Government entities exclusive of VAT in the normal way without a need of Minister’s Exemption Order.