Overview
With effect from 1 July 2018, the Ugandan VAT Act amended the place of supply rules to require non-resident suppliers of electronically supplied services to Ugandan consumers (non-VAT-registered persons) to account for VAT in Uganda.
Subsequently, in December 2018, the Uganda Revenue Authority (“URA”) issued a public notice which 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 was previously USD 40,000 for a given 12-month period or USD 10,000 for a 3-month period. However, effective 1 July 2026, these thresholds were increased to USD 80,000 and USD 20,000, respectively).
The implementation of VAT on ESS for non-resident suppliers became effective on 1 July 2022.
Key provisions applicable to VAT on ESS
| Particulars | Description |
| Scope | VAT on electronic services is charged on B2C only. The URA classifies B2C transactions to only 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 | 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 300 million (USD 80K) per annum or UGX 75 million (USD 20K) per quarter |
| Tax invoice | There is no requirement for a non-resident supplier to issue an electronic invoice . |
Services in scope
Section16(5) (a) of the Ugandan VAT Act defines electronic services to include the following services:
- Websites, web-hosting or remote maintenance of programs and equipment
- Software and the updating of software
- Images, text, and information
- Access to databases
- Music, films and games including games of chance
- Political, cultural, artistic, sporting, scientific and other broadcasts and events including television
- Advertising platforms
- Streaming platforms and subscription-based services
- Cab-hailing services
- Cloud storage
- Data warehousing
Registration and compliance
Non-resident suppliers of any of the above electronic services to non-VAT-registered persons in Uganda are required to register for VAT under the simplified tax registration framework on the URA portal.
Upon registration, the Uganda Revenue Authority (URA) issues the non-resident supplier a Tax Identification Number (TIN). The non-resident supplier is then required to file VAT returns on a quarterly calendar basis and remit the respective VAT collected to URA within fifteen days from the end of every quarter.
Where there are no B2C transactions made in a specific quarter, the non-resident supplier is required to file a nil quarterly VAT return.
In addition, as part of the 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 using the Electronic Fiscal Reporting and Invoicing System (EFRIS). However, they are required to issue invoices or receipts reflecting the value of the supplies made to their Ugandan customers and the respective VAT charged. These invoices or receipts should also reflect the customer’s TINs to help validate the customers’ VAT registration status in Uganda.
Non-resident suppliers of electronic services can invoice in any foreign currency. However, for VAT reporting services this should be translated to Ugandan Shillings using the monthly VAT exchange rates provided on the URA portal.
VAT on costs
There is no recoverability of the VAT incurred costs by non-resident suppliers of electronic services.
Other considerations
Non-resident suppliers of electronic services should also be aware of the 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-resident’s income derived from provision of digital services delivered over the internet, an electronic network, or an online platform to Ugandan customers. This covers both B2B and B2C customer arrangements.
Section 86A of the Income Tax (Amendment) Act 2023 defines digital services to include:
- Online advertising service
- Data service
- Services delivered through an online marketplace or intermediation platform, including an accommodation online marketplace, a vehicle hire online marketplace and any other transport online marketplace.
- Digital content services, including accessing and downloading of digital content.
- Online gaming services
- Cloud computing services
- Data warehousing
- Services other than those services above, delivered through a social media platform or any internet search engine.
- Any other digital services as the Minister may determine by statutory instrument.
The non-resident providers of digital services that qualify for DST are required to file quarterly returns and pay the respective DST by the fifteenth day after the end of the quarter.
Amendment to the application of DST between associates
With effect from 1 July 2025, the Income Tax Act was amended to restrict the application of DST to transactions between associates. This implies that the 5% DST no longer applies to income earned by a non-resident supplier from providing digital services to its associate in Uganda.
Instead, such income will be subject to the standard withholding tax, which is accounted for by the resident entity when making payments to non-residents. This withholding tax is ordinarily charged at 15%, unless there is a Double Taxation Treaty (DTA) that provides for a reduced rate, subject to meeting the requisite beneficial ownership and economic substance criteria.
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