In the 2024/25 financial year, the Uganda Revenue Authority collected nearly UGX 30 billion from 82 nonresident digital service providers through Income Tax and VAT.
While this represents a new source of revenue, the latest Auditor General’s report identified two critical weaknesses in the current system.
First, lack of verification: the URA currently has no technical mechanism to confirm whether figures submitted by these companies are accurate.
The tax body relies entirely on self-declarations, creating a high risk of under-reporting.
Second, an incomplete registry: the list of 82 companies is not comprehensive. Several well-known digital service providers operating in Uganda remain outside the tax net, meaning substantial revenue is likely lost through non-declaration.
The root of the problem is limited visibility. Without a way to track actual payments leaving Ugandan bank accounts and mobile money wallets, the URA cannot independently validate tax returns.
The Accounting Officer told auditors that the Bank of Uganda is procuring a Single National Payment Gateway.
Once operational, the system is expected to provide the URA with real-time access to transaction data, allowing tax filings to be reconciled against actual cash flows.
The Auditor General has urged the Permanent Secretary/Secretary to the Treasury (PSST) to expedite the rollout of the payment gateway.
Until then, Uganda’s digital tax regime remains largely trust-based, leaving billions of shillings flowing across borders unmonitored.
