Uganda’s plan to tax internet data usage VAT registration portal nears completion

Uganda’s Revenue Authority has announced its plans for an online VAT registration portal to simplify the registration process for non-resident digital businesses.

Non-resident digital businesses have had VAT registration obligations in Uganda since 2019 but the practicalities of doing so (including the need for a local agent) were a deterrent. The Uganda Revenue Authority have recently informed non-resident digital businesses that a simplified online registration system is in development and will be available in early 2022.

Uganda VAT: difficulties to comply

The 2019 rules are particularly burdensome, we understand, when it comes to reporting with a requirement for extremely forensic detail (transaction-by-transaction reports) to be included. The rules apply to a range of digital services including (but not limited to) streaming, music, apps, films, e-books, and other internet services. There is also a sales threshold for registration of UGX150 million (circa USD42,200).

The latest changes announced by Uganda’s Revenue Authority should allow non-resident businesses to register for VAT online. This would remove an existing practical reality that the services of local tax agents must be engaged as only Uganda residents can access the VAT registration portal. This is despite the fact that the use of a local tax agent is not a requirement in law. For affected foreign digital businesses this was adding complexity to having sales in Uganda. It was also not in line with the OECD’s guidelines in relation to simplified registrations.

No DST plans in Uganda

In relation to Digital Services Tax (DST), there are currently no plans in Uganda to introduce such a direct tax. However, given the speed of DST adoption elsewhere on the African continent it may not be long before Uganda also reveals its plans for a DST. We will, of course, keep you updated on developments in Uganda.

Uganda’s levy on internet data

Uganda introduced a 12% ‘levy’ on internet data usage from July 1, 2021. The levy is a replacement for a much maligned over-the-top (OTT) tax on social media access that was introduced in the East African country back in 2018. The original source of information was the Uganda Ministry of Finance Twitter account on April 7. Preliminary government estimated that the levy could recoup 451 billion Ugandan shilling (circa USD126.6million) in much-needed tax revenue.

Note: This article was published for the inclusion in a special Taxamo report on developments in Africa.

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