The Uganda Revenue Authority (URA) has devised methods to begin collecting VAT from non-resident service provider businesses operating in the Ugandan economy, including Facebook, in order to increase tax collection.
VAT collection from these businesses will begin on July 1, 2022, with an emphasis on all electronic service providers. More include Netflix, Amazon, Uber, and others. According to URA Commissioner General John Musinguzi, collection of this tax has been delayed due to extensive conversations with these enterprises, but they consented and have been settled, and further taxes will follow as time goes on.
Musinguzi claims that the authority has completed all of the digital infrastructure necessary to efficiently collect this tax, but does not specify how much is anticipated or the enforcement mechanism in the event of noncompliance.
A taxable supply is made by a non-resident person who provides electronic services to a non-taxable person in Uganda, according to Section 16 (2) of the VAT Act. As a result, such a provider must charge VAT on the supply, submit quarterly reports, and pay VAT owed on supply within fifteen days of the end of each quarter.
Websites, web hosting software firms, and those giving photos, text, and information, self-education packages, music films featuring gambling, and other broadcasts and events, as well as those on remote maintenance of programs and equipment, are examples of such businesses.
The government upped the URA’s revenue collection goal for the next fiscal year to Shs 25 trillion, up from Shs 23 trillion, although no new tax policy measures have been implemented.
“We are left with just one option: effectively collect taxes inside the nation and organize additional stakeholders to help us in this endeavor,” Musinguzi added.
He announced the idea during the URA post-budget meeting when stakeholders shared their perspectives on how the URA might be more successful in the next fiscal year.
According to Ramathan Ggoobi, the permanent secretary to the Ministry of Finance and Secretary to the Treasury, Uganda would collect Shs 25 trillion domestically for the first time, with no new taxes added or increased, giving the economy flexibility to cut borrowing.
According to Ggoobi, the government is to restore fiscal discipline by limiting its expenditures, and the money provided for spending by the parliament is to concentrate on production initiatives that can create more income.
“We are avoiding borrowing for consumption, Uganda would never do that,” Ggoobi said. “We are borrowing for productive projects, which we are also sequencing today, and we are going to cancel those that are unlikely to deploy the money on time to prevent enormous debt repayments.”
Uganda now has a debt-to-GDP ratio of 53.12% with a governmental debt of around Shs 73 trillion.
