Uganda Revenue Authority collects Shs700 million from Facebook users

The reveal was made by the Commissioner for Domestic Taxes, Sarah Chelangat. However, she did not divulge the details of the number of users who made the contribution to the VAT.

It has been two years since the government of Uganda blocked Facebook, but the platform still boasts 2.5 million Ugandan users as of 2022 according to data published in Meta’s advertising resources from Datareportal.com.

Since the restrictions were enforced, a big number of Facebook users, including private companies and some government agencies, use Virtual Private Networks (VPN) to access Facebook.

Reopening the platform is expected to unlock bigger revenue and promote the digital economy. The Taxman has earmarked Facebook for at least Shs5 billion in taxes, among other digital platforms in the digital economy revenue basket.

Chelangat said URA also has structures in place to raise revenue from electronic payments made for online advertisement and meetings, Netflix, Amazon, and Google.

Early October 2022, a statement from the platform's Meta Business Help Centre read “Facebook ads from Uganda will be subjected to a value-added tax (VAT) at the applicable local rate of [18 percent]."

Some digital business owners have complained about the tax saying it is has increased their costs.

“It has inconvenienced the cost of acquiring customers and marketing, and that is not good. Instead of spending $100 (Shs368,474) to acquire 10 customers, I spend $118 (Shs434,799) for the same number of customers,” said Stephen Obeli, an e-commerce business owner.

URA made initial contact with non-resident service providers such as Google, Microsoft, Netflix, Meta, Spotify, Zoom, Amazon, Apple, Bolt, and Uber, among others, about registering for the tax due.

According to Section 16(2) (d) of the VAT Act, URA says it is empowered to charge VAT on electronic services supplied to a recipient in Uganda. In the Act, a non-resident person (NR) is considered to have made a taxable supply in Uganda, where electronic services are supplied to a non-taxable person.