The Ugandan government has amended its Income Tax Act to include a new law that imposes a 5% tax on income earned by foreign companies operating in the country.
This comes weeks after President Yoweri Museveni initially refused to assent to the Income Tax Amendment Bill 2023, stating that it needed to include taxes on non-resident digital companies in the country.
In response to the Parliament, the president stated that, “The measure was meant to cater for taxation of digital economies such as; Twitter, Amazon, Netflix etc, the clause related to non-residents and non-residents in Uganda says it doesn’t relate to residents in Uganda as it was mistakenly stated in the minority report. It should be reinstated.”
The Parliament then reprocessed the bill to include a 5% tax on foreign companies, and on Tuesday, July 11, the president assented to the bill.
According to the Ugandan minister for finance Henry Musasizi, the country is not looking at the digital services. “We are looking at the income derived by the provider of these services. For Uber, the money goes to California; the man derives income, but pays no taxes. Now we are saying, can we have a mechanism of having the taxes?” he said.
Uganda joins countries like Nigeria which, in 2021, instituted a 6% tax on foreign digital companies, as well as Zimbabwe, Tunisia, Tanzania and Sierra Leone which all have 5%, 3%, 2% and 1.5% taxes respectively on foreign companies.
