Musicians too have an obligation to pay taxes

As new musicians debut our music scene daily, so has the industry continued to grow. Of late, the industry has been booming with both local and international artists performing in the country.

However, though both local and international artists are required to pay taxes just like any other law abiding citizens and companies, musicians and taxes don’t seem to mix very well. The artistes’ temperament simply does not interface well with Uganda Revenue Authority.

“Musicians, just like any other Ugandans, are supposed to pay tax as per the taxation laws of Uganda,” Ms Sarah Banage, the assistant commissioner-Public & Corporate Affairs, Uganda Revenue Authority says.

“Specifically the laws provide for taxes on incomes (income tax / corporation tax) or taxes on consumption (VAT), which applies to local musicians. However, you find that due to the nature of the business, it’s hard to keep track of them because some have no permanent aboard or operate from their homes.”

And of course there are places where URA cannot deploy like in bars as it becomes very expensive. One musician can stage five shows in five different bars around the country.

“We have some incomes we get that are not taxed by URA for example for the shows that are staged in bars and for most up-country small shows. We are only netted on sponsorships and big concerts,” an artiste’s manager who preferred anonymity told Business Power.

Because of such hurdles, Ms Banage says the organisation has resorted to staging revenue officers at the entrance of concerts to monitor the ticket sales as this seems to be the only way they can collect taxes from concerts though it is labour intensive.

Some organisers, however, see nothing wrong with the system because the job is done instantly, saving them time to follow up with filing tax returns later.
“They always know how many people are in the concert according to the number of tickets sold. They simply collect their VAT per ticket. The rates might be unjust but after all it’s a public obligation as it applies everywhere,” Mr Abbey Mukiibi, who is one of the organisers of CBS FM’s Enkuuka Y’omwaka recently told Business Power.

“If you’re good to them they are good but if you become a problem they can be a bigger problem,” he said. “The easiest way is to involve them from the word go and have a good understanding with the people they’ve deployed because if you give them a hard time they don’t mind billing you by estimation and the figures are always awkward.”

According to URA ratings, the music industry is categorised into two; the first category includes individual musicians and musicians who own companies or recording studios. The second category includes promoters who provide capital to the performers.

“Under the first category, these individuals or companies are registered in different DT - Tax offices under the general income tax act. The second category also involves corporate bodies that organise music events,” Ms Banage says adding that incomes from such events are declared together with their other incomes, which makes it quite difficult to isolate what relates to music.

However, some musicians know how to avoid logger heads. Mr Tshaka Mayanja acted as a coordinator for Silk Events during the R. Kelly concert in Kampala at the beginning of this year and he says he never had any trouble with URA.

“Normally you write a letter to the commissioner and they’ll deploy their people at the event but I don’t know how it’s done with other people, whether they just estimate the crowd and tax you,” Mr Mayanja says.

Taxes paid
Apart from the mentioned taxes, a withholding tax of 15 per cent accrues on international musicians. The organiser/host is required to withhold 15 per cent from any payments to the musician and is also expected to include VAT on the tickets. The VAT collected is later paid over to URA.

For all international shows, taxpayers are required to declare incomes from such shows. In support of this, URA secures copies of the agreements and studies them critically for the contract amounts, the parties involved, the different beneficiaries or stakeholders etc.

“We then demand for the withholding tax, after which we monitor the VAT and corporation tax returns to ensure that the incomes received from the show are declared for tax,” she says.

But a famous events’ organiser who preferred anonymity due to the nature of his work, feels that they are taxed excessively. “I don’t want to be in trouble with URA since I do a lot of other things outside music events but it’s clear to everybody that the taxes especially on concerts involving international artistes are too high,” he told Business Power in a recent interview.

He adds that most of the money goes into publicity and taxes are put on input.
“URA starts getting money before you get anything because VAT is everywhere and on everything,” he says. “If you looked at the figures paid for billboards to the radio and television adverts, they’re devastating. All advert invoices have VAT inclusive and they make adverts very expensive.”

Organisers, he says, pay Shs10 million for each billboard to stand for a month and URA takes 1.8 per cent of that. “Shs1.8 million from each billboard is theirs (URA) and you want to have many billboards standing for people to see and also leave them up for some months,” he said. “International artistes’ concerts are the most expensive - the taxes are almost impossible to pay - because they charge you for every little thing, even the equipment the artiste carries and they know the artiste will be taking it back. URA charges you bond tax.”

He adds that in case URA doubts the figure an events organiser has given them, they always launch an investigation. However, Ms Banage maintains that the road to tax collection is not a smooth one.

“The major challenge in collecting tax from musicians is that the majority rarely file tax returns and we have to follow them up closely instead of self assessing themselves like other taxpayers,” Ms Banage says.

“It is also very difficult to ascertain their chargeable income because of the complexity of the transactions involved i.e. they don’t maintain records like agreements between promoters and performers.

Musicians tale
Some musicians, however, pay their taxes diligently.

“It is very okay to tax musicians. I actually pay a total of almost Shs7 million in taxes every month and about Shs75 million per year through my companies and performance,” Musician Robert Kyagulanyi well known as Bobi Wine told Business Power recently.

“For corporate performances, from every million I earn, URA takes off 6 per cent and I make an average of Shs30 million from corporate performances every month and that’s okay.”