Uganda’s New Tax Roping Global Tech Giants Sparks Unease

Uganda’s parliament successfully passed new tax legislation on Tuesday evening, introducing a 5 percent income levy on foreign providers of digital communications services, including major players like Twitter and Meta’s Facebook.

With the aim of capitalizing on the rapidly expanding digital economy, Ugandan authorities have been actively exploring strategies to generate additional revenue in order to tackle the growing public debt burden.

Via a tweet, the Ugandan parliament confirmed the passage of the “Income Tax (Amendment) Bill, 2023,” which encompasses the newly imposed levy.

Under this new legislation, non-resident digital service providers such as Facebook, Twitter, Amazon, and Netflix will also be subject to taxation within Uganda.

However, concerns have arisen regarding the potential consequences of the bill, reports Reuters. Critics, including opposition lawmakers and human rights advocates, have expressed apprehension that social media platforms may start charging Ugandans for services that are currently free, viewing this move as a means to restrict access to social media and suppress freedom of speech, especially given the government’s unfavourable stance on these platforms.

President Yoweri Museveni, who has held power since 1986, has previously criticized social media for its tendency to facilitate the spread of rumours.

Nevertheless, parliament explicitly stated that the new tax legislation is not a “social media tax” and will not adversely affect the everyday Ugandan citizen.

Taxing non-resident tech companies have become a point of interest in various countries in recent years, as both regional entities and individual states tinker with the challenge of implementing tax measures on global firms in their respective jurisdictions. Nigeria, Kenya, and Tanzania, for instance, have enacted tax regulations over the past three years with the aim of harnessing the potential of the digital economy. Notably, these measures target multinational corporations such as Facebook, Amazon, Alibaba, Google, Zoom, and Netflix, among others.

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