Uganda Implements 5% Tax on Income of Foreign Tech Companies Operating Locally

Uganda has implemented a new tax law that requires foreign tech companies operating in the country, including Netflix, Twitter, Facebook, Google, Amazon, and Uber, to pay a 5% levy on their locally earned income. This tax law had been previously discussed and discarded in May, but President Yoweri Museveni expressed his disagreement with the decision and later signed a bill incorporating the levy clause.

Under the new legislation, non-resident providers of digital services in Uganda will be subject to the 5% income tax. This move aims to ensure that foreign tech companies contribute their fair share to the Ugandan economy.

The Ugandan parliament officially confirmed the passing of the income tax (Amendment) bill, 2023, in a statement posted on Twitter. The bill specifically targets digital service providers such as Facebook, Twitter, Amazon, and Netflix.

This tax law represents Uganda’s efforts to regulate and generate revenue from the rapidly expanding digital economy. By imposing a levy on foreign tech companies, the government seeks to capture a portion of the income derived from their operations within the country.

While this move is expected to generate additional revenue for the Ugandan government, it also raises questions about potential repercussions and the impact on foreign tech companies operating in the country. The implementation and enforcement of the tax law will be closely monitored to assess its effectiveness and any potential challenges that may arise.