Govt starts collecting taxes from online businesses

The government has started collecting taxes on income earned from online businesses.

John Musinguzi Rujoki, the Uganda Revenue Authority (URA) director-general said Saturday they have started receiving payment voluntarily.

"They (taxpayers) have started filing their returns, and we want to see how much they pay us at the end of the year. Some have started paying provisional tax. I will come with the figures on how much we have collected," he said.

He was appearing at a local radio talk show on Saturday morning.

He said they have provided for how to pay value-added tax online, adding that many traders have been filing online quarterly.

"What we are now trying to acquire is another technology to monitor them effectively because we are now relying on voluntary compliance."

He said they are optimistic about collecting more taxes online because "unlike other businesses, you leave a trail."

"So it should be in their ( online business owners') interest to be declaring the truth because if they don't and we have technology that can find out what they have taken from the Ugandan jurisdiction then we must make them pay backwards."

Government in the 2022/2023 financial year introduced a tax on Facebook, Twitter and Netflix.

Other companies affected included Google, Amazon, and Uber.

The Income Tax (ammendment) Act 2023 imposed a 5 per cent tax on the income earned in the country by foreign digital companies such as Facebook, Twitter, and any foreign-owned company offering services such as data, online gaming, accessing and downloading of digital content, and data warehousing.

At 14 per cent, Uganda has one of the lowest tax to GDP ratios in the region according to analysts.

This has reportedly resulted in an overload of the tax burden on the few existing taxpayers including salaried earners through the pay as you earn tax.

However, the government is pushing to bring it to at least 20 per cent in the next five years according to the URA boss.