URA seeks to collect Shs5b of VAT on non-resident tech giants

The Uganda Revenue Authority (URA) said it plans to collect at least 5 billion shillings of the new value added tax instituted on non-resident providers of electronic services such as social media, streaming sites and other Internet-based tech giants.

In a brief shared with Monitor On Thursday, Ms Sarah M Chelangat, National Tax Commissioner for the URA, said the digital services VAT aims to level the playing field between local service providers who already charge VAT and foreign tech giants who don’t. previously were not obliged to collect VAT.

Uganda, she added, is not the first to implement the tax, noting that more than 70 countries, including South Africa, Nigeria and Kenya, were already charging VAT to service providers. non-resident digital.

“URA anticipates that this step will generate an additional Shs5b of tax revenue in the current [2022/23] fiscal year,” she said.

The URA also indicated that the VAT measures target a number of electronic services, including web hosting, software and streaming services, online advertising, online gambling and betting, broadcasting music and movies, remote programs and equipment maintenance.

Others are subscription media such as news portals, magazines, journals, electronic data management, online data warehousing, file sharing, cloud storage services and the provision search engines and automated help desks.

Purchasing such services, the URA said, will require non-resident electronic service providers such as Microsoft and Google to factor into their prices an 18% VAT charge, which will be passed on to the URA.

In September, URA said Monitor that social media, streaming sites and other internet tech giants had until October 30 to comply with VAT.

Monitor could not easily establish whether all non-resident electronic service providers had complied with the directive.

The URA had previously reported that the government had, since last December, engaged around 20 non-resident e-service providers with virtual operations in Uganda to start collecting VAT on trade revenue, which the country is targeting Uganda.

Service providers, URA said, included Netflix, Uber, Meta and Apple, among others.

Some, such as Zoom and Meta, which operate a number of social media sites, including Facebook, WhatsApp and Instagram, among others, have since posted notices in which they stated that from October, ads making state of Uganda as sold domestically would apply. to VAT. VAT on electronic services is provided for by the VAT Law, which was amended in July 2021 to provide for the quarterly filing of VAT returns by non-resident electronic service providers.

Companies that fall into this category, Ms. Chelangat said, are those that meet the VAT threshold of 150 million shillings.

These companies will be required to file returns online every 15th of each month and will also be required to share transaction details with the URA at the end of each quarter.

During discussions on how the new directive would be implemented, Mr. Ibrahim Kibuuka Bbosa, Assistant Commissioner for Public and Corporate Affairs of the URA, recently said that some companies had disputed the sharing of customer details with the URA, noting that doing so would compromise their privacy and confidentiality policies.

The URA has also indicated that in the future it, together with the government, will explore ways to tax the direct income of non-resident digital businesses, derived from sources in Uganda.

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