Govt tables bills imposing taxes on international phone calls

Government tables bills imposing taxes on international telephone calls and digital businesses.

The bills tabled are in line with proposed tax measures for the fiscal year 2023/24.

According to the Ministry of Finance, several bills in parliament, including those related to Value Added Tax (VAT) and Withholding Tax, have been tabled with the aim of imposing taxes on international telephone calls and digital businesses.

The Minister of ICT and National Guidance, Chris Baryomunsi, noted that one of the proposed tax measures is to impose a 5% tax on various online services.

“These services include advertising platforms, streaming platforms, subscription-based services, cab hailing services, cloud storage, data warehousing, and other services that may be determined by the Minister through statutory instruments,” he noted.

He said government believes that taxing digital services will generate revenue for the country and help level the playing field for local businesses.

However, according to Blaise Okwera, a tax consultant, there are concerns about how these taxes may impact consumers and businesses operating in the digital space.

He said businesses and consumers alike are closely watching these proposed tax measures, as they could potentially impact the cost of using digital services in Uganda.

Critics argued that these taxes could increase the cost of doing business, especially for small and medium sized enterprises (SMEs), and may ultimately be passed on to consumers.

The move to tax digital services is not unique to Uganda. In neighboring Kenya, the government has already implemented a similar tax, known as the digital service tax, which has been levied on tech giants such as Google, Netflix, Meta (formerly Facebook), Twitter, and Microsoft.

According to the Kenya Revenue Authority, they collected KSh174 million (equivalent to approximately USD 1.6 million) in digital service taxes in the six months leading up to December 2022.