Overview
The VAT Act amended the place of supply rules with effect from 1 July 2018 to create a Uganda place of supply for electronic services supplied by non-residents to non-VAT registered persons.
Subsequently, in December 2018, the Uganda Revenue Authority (URA) issued a public notice that provided guidance on how a non-resident supplying electronic services to a non-VAT registered person in Uganda is required to account for VAT, subject to meeting the registration threshold. (The VAT registration threshold is USD 40,000 for a given 12-month period or USD 10,000 for a three-month period).
The implementation of ESS commenced on 1 July 2022, with all non-resident suppliers of electronic services required to file a quarterly VAT return and remit the VAT collected to the URA within 15 days from the end of every calendar quarter.
Release date: April 2024
Key provisions applicable to VAT on ESS |
| Table 1 |
Services in scope |
Section16(5)(a) of the VAT Act defines electronic services to include the following:
|
Registration and compliance |
Non-resident suppliers of any of the above electronic services to persons in Uganda are required to register for VAT under the simplified tax registration framework on the URA portal. Once non-resident suppliers of electronic services are registered, a tax identification number (TIN) is issued by the URA. The non-resident supplier is required to file VAT returns every calendar quarter and remit the respective VAT collected to the URA within 15 days from the end of every quarter. Where there are no B2C transactions made in a specific quarter, the non resident must file a nil quarterly VAT return. It is also worth noting that as part of its quarterly compliance, a VAT-registered non-resident supplier of electronic services is required to submit a CSV file of all B2B transactions for the quarter by the 21st day from the end of every quarter. |
Invoicing |
Non-resident suppliers of electronic services are exempt from issuing electronic tax invoices. However, they should issue invoices or receipts showing the value of the supplies made to Ugandan customers and the VAT charged. These invoices or receipts should also reflect the customer’s TIN to help validate the customer’s VAT registration status in Uganda. Non-resident suppliers of electronic services can invoice in any foreign currency. However, this should be translated to Ugandan shillings on accounting for VAT using the monthly VAT exchange rates provided on the URA portal. |
VAT on costs |
There is no recoverability of the VAT costs incurred by non-resident suppliers of electronic services. |
Other considerations |
| Non-resident suppliers of electronic services need to be aware of digital service tax (DST) imposed on non-resident providers of digital services to customers in Uganda, with effect from 1 July 2023. DST is charged at a rate of 5% on non-residents’ income derived from the provision of digital services delivered over the internet, electronic network, or online platform to Ugandan customers. |
Particulars |
Description |
Scope |
VAT on electronic services is charged on B2C only, and the URA classifies B2C transactions only to include transactions made with Ugandan customers who are not VAT-registered in Uganda. |
Liability to remit VAT |
Non-resident supplier of electronic services |
VAT rate |
18% |
Taxable value |
The price payable by the recipient of the electronic service (Ugandan customer that is not VAT-registered) |
Effective date |
1 July 2022 |
VAT registration threshold |
UGX 150 million (USD40,000) per annum (UGX 37.5 million or USD10,000 per quarter) |
Tax invoice |
There is no requirement for a non-resident supplier to issue an electronic invoice. |
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