Uganda imposes VAT on digital services
Uganda has joined most countries around the world and expanded VAT to include non-resident digital platforms. Effective 1 July 2022, VAT of 18% will be charged on electronic services like web hosting, software and streaming services. This means that when a customer in Uganda purchases any of these services from a company like Amazon or Meta, the company must charge VAT of 18% and submit this charge to the Ugandan Revenue Authority. Uganda joins many other countries that have expanded VAT to digital services such as Kenya and South Africa and most developed countries around the world. According to the OECD, 70 countries currently charge VAT on digital services and a further 40 are planning to implement a digital VAT in the next year. The OECD estimates that VAT makes up the biggest share of tax revenue for African governments at 29%.
From a fairness perspective, this approach makes sense because if a customer has to pay VAT on offline purchases, they should pay for online purchases as well. And adopting VAT on digital services is a far better approach than imposing a digital services tax like in Kenya, especially when the revenue from a DST is so tiny.
Other news from around Africa
- Kenya adds more ICT taxes: Kenya has added a 10% excise duty on cellular phones as well as a SIM card tax of Ksh 50 per SIM card.
- Another undersea cable in Namibia: The Equiano cable is partially operational and landed in Swakopmund. When it is fully operational in Q4 this year, it will provide 20 times more capacity than was previously available and increase internet speeds by more than 2.5 times.
- Safaricom now offers interest free loans via MPESA: Customers of MPESA can take advantage of interest free loans for a period of 30 days and up to KSh 100,000.
- Safaricom Ethiopia: The official launch will occur in the city of Dire Dawa next month with services to 25% of the population by April 2023.