Value Added Tax on fertilizers, pesticides, ox ploughs and seed grills has been deferred for a year after Parliament passed the Vat Amendment bill this afternoon.
The House today passed the bill that will also see VAT on milk coolers, hatcheries and agricultural tractors not levied during the 12-month tax holiday.
However, the taxes on imported cereals were retained.
During the budget reading, Finance Minister, Maria Kiwanuka announced an 18% VAT on agricultural imports, drawing sharp resistance from farmers across the country.
Finance committee chairman, Robert Ssebunya says some compromises were made to ensure that while the agricultural sector needs to protected, there should be a steady flow of income into the economy through taxes.
Recently, a group of farmers and a coalition of Non-governmental organizations petitioned Parliament and handed over a petition of 1 million signatures to drop the tax proposal on agriculture inputs.