Kampala — The Minister of State for Finance (General Duties), Henry Musasizi, defended a proposal to impose a 5 % tax on the gross income earned by international digital companies operating in Uganda. Musasizi, together with other officials from the Ministry of Finance, appeared before Parliament’s Finance Committee on Thursday, 13 April 2023, to justify the proposals contained in seven tax bills intended to raise revenue for the 2023/2024 national budget. The bills under consideration are the Excise Duty (Amendment) Bill 2023, the Traffic and Road Safety (Amendment) Bill 2023, the Tax Procedures Code (Amendment) Bill 2023, the Income Tax (Amendment) Bill 2023, the Automatic Exchange of Information Bill 2023, the Value Added Tax (Amendment) Bill 2023, and the Lotteries and Gaming Bill 2023.
The Income Tax (Amendment) Bill seeks to tax non‑residents that provide digital services in Uganda. The proposal states: “A tax is imposed on every non‑resident person deriving income from providing digital services in Uganda to a customer in Uganda at the rate of 5 %.” Eligible companies are those whose income is derived from offering digital services in Uganda through the internet, electronic networks, or online platforms.
When asked by Karim Masaba (Ind., Industrial Division) how the tax would be implemented, Tracy Akello explained that a charging system would require digital companies to account for income sourced in Uganda. Masaba noted that Canada introduced a similar tax on Netflix, which resulted in the charge being passed on to consumers. Hon. Basil Bataringaya (NRM, Kashari North) expressed concern that taxing the companies might lead them to increase fees for Ugandans on social‑media services and advertising.
Tracy Akello, the Rulings and Interpretations Business Policy Supervisor at the Uganda Revenue Authority (URA), clarified that the tax will be paid by the non‑resident digital companies, not by Ugandan users. “We intend to tax the likes of Amazon, Netflix, Twitter, Facebook, as long as they are sourcing income from Uganda,” she said. URA Commissioner General John Musinguzi added that a provision has been made for international digital companies to file their returns online on a quarterly basis. “We have already started collecting VAT, and now we are proposing to collect income tax,” Musinguzi affirmed.
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