Afcacia

Soon after the Ministry of Information Communication Technology and National Guidance (MoICT&NG) in Uganda announced the launch of the Online Business Registration System (OBRS), the country’s revenue authority has started collecting taxes from income earned by online businesses. 

The Uganda Revenue Authority’s director-general John Musinguzi stated that the government had started receiving remittance voluntarily and were monitoring the exercise closely. “They have started filing their returns and we want to see how much they will pay us at the end of the year. Some have started paying provisional tax,” he said. Musinguzi added that URA is planning to acquire another technology to monitor businesses operating online because “we are now relying on voluntary compliance.”

The move is seen as an effort to broaden the country’s tax base and enhance revenue collections. Recently, the tax body recorded the highest revenue collection in decades when it announced a $5.64bn revenue collection for the 2021/2022 financial year. This was followed by another remarkable collection of $6.7bn for the 2022/2023 financial year, surpassing the $6.01bn target set by the Ministry of Finance, Planning and Economic Development for the year.

During the last financial year, the government introduced a daily tax of $0.05 on the usage of social media platforms including Meta’s Facebook, Instagram and whatsapp, Netflix and X (formerly Twitter) platform. It also introduced a 5% tax on income earned by foreign digital companies in the country. 

The regulator noted that the government is optimistic the new procedures will ensure more tax compliance since unlike in other businesses, online businesses leave a trail. There is however a growing displeasure by the affected entities, with most having to employ more aggressive online marketing strategies to maintain profitability.