URA to start charging VAT on Netflix, Facebook, Amazon next week

The Uganda Revenue Authority (URA) is set to start charging VAT from all non-resident service provider companies operating in Uganda.

The revelation was made by the URA Commissioner General John Musinguzi while addressing the EAC Post Tax and Budget Dialogue for the financial year 2022/23.

Musinguzi said that the collection of this tax will start next week on July 1 2022.

According to the commissioner general, the VAT will mainly focus on all electronic service providers that are non-residents. These include: Facebook, Netflix, Amazon, among others.

This means Ugandans, who are regular users of these services could fork out more.

"The collection of this tax has been delayed by discussions with these companies, but we finally agreed and all the necessary digital infrastructure has now been put in place in order for us to effectively collect this tax…” Musinguzi said.

In a phone interview with this reporter, URA spokesperson Ibrahim Bbossa reaffirmed the commissioner general’s statement and said that they were ready to start collecting this tax immediately.

Bbossa said that URA will require all electronic service providers who are non-residents to account for VAT.

"A non-resident supplier supplying electronic services from a country outside Uganda to a recipient in Uganda who is not registered for VAT in Uganda must register as a non-resident supplier and collect VAT on electronic services," Bbossa told The Nile Post.

The URA spokesperson said that these will have to register through a form that has been placed on the URA website.

What the VAT Act says

A non-resident person, according to section 16 (2) of the VAT Act is one who supplies electronic services to a non-taxable person in Uganda making a taxable supply. Such a supplier is therefore required to charge VAT on the supply, file quarterly returns, and pay VAT due on supply within fifteen days from the end of each quarter.

The Act describes such companies to include websites and web hosting software companies, websites that supply images, text and information, self-education packages, music films including gambling, and other broadcasts and events, as well as those on remote maintenance of programs and equipment.

Government increased URA’s revenue collection target from Shs 23 trillion in the 2021/22 financial year to Shs 25 trillion in the 2022/23 financial year, without any new tax policy measures being introduced.

The URA commissioner general said that they were confident that this target will be met.