In the first half of the financial year, the telecommunication sector in Uganda has fallen to number four, out of the usual top two tax payers that contribute the biggest chunk of the country’s tax revenue. From the usual UGX 2 Trillion, the communications sector only contributed UGX 800 Billion
According to the Uganda Revenue Authority (URA), they collect about UGX 2 Trillion from the telecom sector, but a recent report has indicated that they were only able to collect about UGX 824 Billion in this half year. So why the huge drop in revenues? The tax man has explained that the two major telecoms (Airtel and MTN Uganda), were still doing some extensive investments in their respective networks.
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This means they had invested a lot of money in buying telecom equipment that is needed to ensure improvement in network capacity and also exploring new areas of coverage. The effect of these activities by the telecoms implies a huge VAT input to URA while having the VAT output from the telecoms.
URA hopes that in the next half of the financial year, the telecom companies will not have as much investment in their respective networks in order to realize a rise in tax revenues back to the 2 trillion shillings range that they expect from the sector.
URA collects 700 million in tax from Meta
The UGX 98 billion shortfall from URA for the first half of the financial year, largely came from international taxes in the areas of fuel levy and value-added tax on imports among others. While it was perceived as difficult, some revenue is now being collected from the use of other digital services, URA is now collecting VAT on platforms like Amazon, Netflix, Meta’s Facebook, Zoom, and other online advertisements and marketing platforms.
URA says that Facebook sources income from Uganda and so far, they’ve collected about UGX 700 million, the issue here is that the platform is still banned in Uganda and it was not clear how they are able to tax a banned service. Overall, if tax was used as an indicator of the health of the economy, at this time, with the various slim shortfall, it would assure that why things could improve. It’s generally, not as bad as it seems gone by the process of the taxman.
