Uganda ’s tax body has started to add online business enterprises into the tax bracket. Dickson Kateshumbwa, commissioner of customs at Uganda Revenue Authority (URA), said that the tax body has already issued notices to online enterprises, urging them to register.
“We issued guidelines through notices requiring them to register. We will be following them up,” Kateshumbwa said.
Here Is All You Need To Know
- The URA’s move to tax online businesses is one of the measures taken by the tax body to widen the country’s tax base.
- According to the World Bank, Uganda has to improve its tax revenue if the east African country is to sustain economic growth.
- The bank said that tax collection currently accounted for 14 percent of the country’s gross domestic product, lower than regional peers, and was 16 percent lower than the government’s target.
- This low tax collection hinders the country’s capacity to finance investments in infrastructure and deliver essential services, according to the global financial institution.
- URA said it is also looking at having a law to enable the taxation of online businesses without stifling them.
In the three months following the introduction of social media tax in July 2018, there was a noted decline in the number of internet users, total revenues collected, as well as mobile money transactions. In a series of tweets, the Uganda Communications Commission noted internet subscription declined by more than 2.5 million users, while the sum of taxpayers from over-the-top (OTT) media services decreased by more than 1.2 million users. The value of mobile money transactions also fell by 4.5 trillion Ugandan shillings ($1.2 million).
The institution of the fee was first proposed in March last year by president Yoweri Museveni in a bid to curb gossip and increase revenues. Then in July, the East African nation introduced a tax on users accessing 60 websites and social media apps from their phones, including WhatsApp, Twitter, and Facebook.
The levy is collected by telecom companies, who deduct a daily or weekly fee whenever a user accesses the specified apps. Authorities also increased excise duty fees on mobile money transactions from 10% to 15%.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world