URA to Collect Taxes from e-Commerce Economy

Uganda Revenue Authority (URA) will start collecting Value Added Tax (VAT) from non-resident electronic services provider companies operating in the Ugandan economy, effective July 1, 2022.

This was contained in a public notice issued by URA on January 27, 2022, notifying all non-resident suppliers of electronic services to collect, file and pay this tax.

The services include online advertising, online music streaming, movie streaming services, websites, web- hosting or remote maintenance of programs and equipment, supply of software and software updates, supply of images, text and information, access to databases, self-education packages, music, films and games of chance, political, cultural, artistic, sporting, scientific and other broad casts and events including television etc.

According to Section 16(2) (d) of the VAT Act, URA is empowered to charge VAT on electronic services supplied to a recipient in Uganda.

TheAct provides that a non-resident person (NR) is considered to have made a taxable supply in Uganda, where electronic services are supplied to a non -taxable person in Uganda.

A non-taxable person in this case refers to a person who is not registered for VAT. This provision applies to non-taxable persons because taxable persons already pay this VAT under the reverse charge mechanism.

Although this legal provision was first enacted in 2011, URA could not collect this VAT then due to undefined provisions for how the Non-residents would account for the VAT once charged.

As a result, section 31A was introduced in July 2020 stipulating that Non-residents account for this tax every quarter on the 15th day of the first month following the end of a quarter.

While many countries around the world implement this measure, Uganda becomes the fourth African country to take this up after South Africa, Nigeria and Kenya.

The tax body, has made initial contact with many of the non-resident service providers such as Google, Microsoft, Netflix, Meta, Spotify, Zoom, Amazon, Apple, Bolt, Uber etc and some of these entities have registered and paid the tax due.

The tax man expects to collect at least UGX5Bn in taxes from this measure.
According to URA, this is one of the steps Uganda is making towards collecting taxes from the e-Commerce economy.
Credit: URA Website