The government of Uganda through the Ministry of Finance, Planning and Economic Development is set to introduce Digital tax that will see over the top companies that carry out streaming to pay for tax to the Ugandan government.
Companies targeted by this Digital tax include mainly subscription streaming sites like Apple’s music streaming site Apple (iTunes), Spotify which is also a music streaming site, Netflix, Walt Disney’s Video on Demand (VOD) site Disney plus, Amazon’s Prime Video and many others.
The government says that these companies make a lot of money in Uganda and leave without paying a shilling but rather take taxes to their home countries. The government is also seeking to broaden the tax base to increase its revenue in order to finance its recurrent budget.
Companies will have to declare how much they earn from Uganda
Digital Tax will be the second tax to be levied on Over the top media companies with the first being OTT Tax which was introduced in 2018 that mainly affected social media sites Facebook, Twitter, Whatsapp, Instagram, Snapchat and WeChat.
Unlike OTT which is paid by direct consumers, the government plans to tax companies directly basing on the gross revenue they earn from the country.
“We can amalgamate or match the transactions that have been done in the country or together with their value and we tax that based on the gross. We can have a tax linked to gross revenue from Uganda but we need a corporation” Moses Kaggwa who the Director of Economic Affairs in the Ministry of Finance told Next Media Services’ Nilepost.
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Subscription based streaming sites are on increase with Netflix a popular movie streaming site leading. Netflix is one of the top 10 most visited sites in Uganda according to Alexa, a web ranking site, which shows how popular Netflix is. Besides Netflix, other popular sites include Disney +, a streaming site owned by Walt Disney, Apple Music, Spotify and others.
The success of this tax will depend partly on cooperation between streaming companies and the government of Uganda.