The new Uganda laws permit 5% off taxes and non-inhabitants. This job work is covered with online advertising, data services, and online clients. Tech giants like Meta and Netflix will be affected, joining Kenya and Nigeria in proposing similar taxes. In late March 2023, Uganda's Minister of Finance, Planning, and Economic Development introduced the 2023 Income Tax (Amendment) Bill and the Mutual Administrative Assistance Bill on Tax Matters (Implementation) before Parliament. The tax reform bill covers the main areas such as income tax and VAT, among others, such as the tax bill on lottery and gambling. Part of the proposed changes is to tax non-resident companies that provide digital services to Ugandans. President Yoweri Museveni has signed the bills into law, meaning they will come into force soon. However, what do the new laws say and imply for foreign tech companies operating in the country? The new order introduces the 5% taxes and non-income access by providing customers in Uganda. The Law declared the non-inhabitants from earnings to obtain a customer in Uganda if the Internet or inverted Internet. Under this law, "digital services" cover a wide range of services, including online media services, data services, and services supported by online consumers or discussion platforms, such as hosting, car rental, and other travel-based platforms. In addition, digital content services are also included, covering access and download of digital content, online gaming services, cloud computing services, and data storage. The bill includes other functions provided by the media online advertising or online search engine. It makes other digital functions to be a Minister's Minister for a 1940-law command.
A new law has introduced digital services tax (DST) for foreign internet service providers like Meta, Netflix, Google, and others like e-cab companies like Bolt and Uber. However, how this amendment will be implemented has not been proposed. Also, it is unclear whether it will be implemented through taxation or by requiring non-residents to file tax returns. No exemption is mentioned for the final 15% withholding tax on non-residents earning income under Ugandan source employment contracts during DST. This implies that the effective tax rate reaches 20% if both measures are applied. The conflict may be addressed in a future amendment, but that has not been done for now. Uganda has now joined Kenya, which introduced DST as part of the 2020 budget bill. The law saw the introduction of a digital tax of 1.5% of gross business profits. As a result, taxes are paid by people who earn money from services and products that enter the state through digital marketing. Digital service tax is for the transfer of payment to service providers. It doubled to 3% in mid-2022. In 2022, Nigeria introduced a 6% digital services tax. At the same time, non-digital service providers want to collect VAT on their offerings. As in the case of Kenya and Uganda, these digital services cover applications, frequent shopping, electronic data storage, and online advertising. Foreign companies such as Netflix and Meta, which provide digital services, must pay 6% of their annual revenue from their Nigerian business to the Federal Inland Revenue Service (FIRS) in accordance with the law. Nigeria also introduced separate VAT on foreign digital services in January 2022.
