Social media, tech firms have until October 30 to be VAT compliant 

All social media and other non-resident tech giants must, beginning October 30, ensure that they have complied with value added tax requirements. PHOTO | Edgar R Batte 

What you need to know:

Uganda Revenue Authority says they have been negotiating with non-resident tech companies to start collecting value added tax on commercial proceeds whose sold to country targets Uganda 

Uganda Revenue Authority (URA) has said social media, streaming sites and other internet giants  have until October 30 to register for value added tax (VAT).  

Speaking at the weekend, Mr Ibrahim Kibuuka Bbosa, the URA assistant commissioner public and corporate affairs, told Monitor that government had since December last year been engaging non-resident electronic service providers with virtual operations in Uganda to start collecting VAT from commercial proceeds, whose sold to country targets Uganda. 

“The negotiations started sometime in December [2021]. Some have been concluded. Negotiation for Facebook concluded just two weeks ago. We gave [others] up to October 30 to have completed everything,” he said. 

However, during the negotiations, Mr Bbosa said, some companies had presented a number of concerns with some saying that integrating their systems with URA’s would compromise privacy and confidentiality policies as well as introducing a new cost burden on their operations. 

Under the negotiations, URA and participating companies also  agreed that the reporting period would be quarterly after URA had rejected annual reporting that had been proposed by tech companies. At the same time, companies had rejected URA’s monthly reporting proposal.  

In June, URA indicated it would beginning July implement new measures that sought to collect VAT from non-resident electronic service providers, such as Facebook, Netflix, Amazon and Uber. 

At the weekend Mr Bbosa also indicated that two companies, among them Netflix and Apple had already implemented the new measures, in which they have so far collected Shs900m.  However, he did not indicate the period in which the money was collected. 

Netflix is a streaming service provider while Apple is a technology company that sells electronics, software and online services. 

On Friday, Meta, which operates a number of social sites including Facebook, WhatsApp and Instagram, published a notice in which it noted that as of October Facebook ads in Uganda would be applicable to VAT.  

“This applies to advertisers whose sold to country on their business or personal address is set to Uganda,” the notice reads in part, noting that advertisers must add their tax identification numbers (TINs) on their settings to enable onward VAT collection, failure of which the advertiser “will be responsible for self-assessing and paying VAT under reverse charge”. 

The notice also noted that Meta will now share advertiser information with URA as a requirement of the Tax Procedure Code Act.        

Mr Bbosa also indicated that so far, of the 20 companies that had been engaged in negotiations, 10 had already concluded the registration process while five were at 90 percent. 

“Many of them have asked for some extension to be able of comply. In regulatory terms such negotiations are healthy,” he said, noting that companies without a physical presence in Uganda but have their services in the country will be required to appoint agents to manage their VAT related obligations. 

Increasing tax to GDP ratio 

Government has been working on a number of measures as a way to widen the tax base with the view of growing tax to gross domestic ratio. 

In May, government indicated the ratio of tax to gross domestic product had fallen to 11.4 percent, which according to Ministry of Finance Permanent Secretary Ramathan Ggoobi, calls for a multifaceted approach to help Uganda realise its development agenda. 

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