Parliament of Uganda has approved and passed into law the Income Tax Amendment Bill 2023, in a move that will see Twitter, Facebook, Netflix and Amazon among others, pay a 5% Withholding tax on the gross revenue they make in Uganda.
This followed the decision by President Museveni to withhold signing into law the Income Tax Amendment Bill 2023, and insisted on imposing a 5% Withholding Tax on gross income digital companies are making in Uganda saying the tax will be paid by the companies and won’t be borne by Ugandans as had been alleged in the minority report by the Opposition.
After the reconsideration of Income Tax Amendment Bill 2023, Amos Kankunda, Chairperson Finance Committee argued that the proposal intends to introduce withholding tax imposed on income derived by a non-resident person from provision of digital services in Uganda and is meant to majorly cater for taxation of the digital economy such as Facebook, Twitter, Amazon, Netflix and asked to have the tax reinstated.
He said that the digital tax is not a social media tax and will not affect an ordinary Ugandan in any way for the simple reason that the Multi-National Enterprises will be allowed a credit in their own country for taxes paid in Uganda.
“The Committee further observed that the multinational companies who are being targeted by the proposal already agreed to file returns for the proposed digital tax with Uganda Revenue Authority, and that they are currently already filing and paying Value Added Tax. It was also noted that this does not affect the business process outsourcing,” said Kankunda.
While presenting the minority report, Nandala Mafabi (Budadiri West) denied claims that the opposition had argued that the digital tax would be borne by Ugandans, saying this had been misconstrued by the President arguing that the imposition of a tax on digital services providers, whether resident or non-resident will have a ripple effect on the citizens.
“Prices for internet services will certainly be increased to mark up the imposed tax thus retarding our technological advancement. To make matters worse, the Minister for Finance did not provide any studies to show how the tax will affect local consumers. In the alternative, we propose that a lower tax rate of 2% be imposed pending further studies on the effect of this tax on the Country’s technological advancement,” said Nandala.
The government argued that the tax seeks to raise Shs100Bn in revenue annually.
