Uganda Revenue Authority has announced a Value Added Tax on electronic services supplied to Ugandans by foreigners. The tax is to effect on services provided on or through a telecommunications network.
According to the Authority, these services can be websites, web-hosting or remote maintenance of programs and equipment; Software and updates to software; Images, text and information that includes advertising; Access to databases; Self-education packages; Music, films and games including games of chance; Political, cultural, artistic, sporting, scientific and other broadcasts and events including television.
Citing the VAT Act, URA directs foreigners that supply these services in Uganda to register for VAT, file a return, and account for VAT on their supplies.
Under Section 16 of the VAT Act, any non–resident person who supplies electronic services to a non-taxable person present in Uganda, makes a taxable supply in Uganda. This non-resident person is required to register for VAT, file a return under Section 16 of the Tax Procedure Code Act, and account for VAT on the transactions supplied in Uganda in the form provided by the Commissioner.
The return form is available on the URA web portal. The authority says that the non- resident person may appoint a tax representative for purposes of effecting the defined provisions. A failure to register and account for VAT attracts penal taxes and interest.
Value Added Tax in Uganda
The standard rate of VAT in Uganda is 18%. Note that not all types of supplies apply to it, some are zero rated or exempt. Persons who make supplies that are VATable and whose turnover exceeds the annual threshold for VAT registration which is UGX 150,000,000 are required to register for VAT with the URA.
Any person who, since commencement of business, makes taxable supplies over a period of three consecutive calendar months in excess of ¼ the annual registration threshold i.e. UGX 12,500,000 is expected to apply for registration within twenty days after the third month of commencing business.
