Taxing the Tech Titans: Uganda Targets Facebook, Netflix, and Foreign Digital Service Providers

Parliament has imposed a tax on companies reporting losses for more than seven years with 50 per cent of the losses carried forward now being subject to tax in new amendments to the Income Tax Act.

https://twitter.com/nilepostnews/status/1679406873487847426

During the House sitting early this week, Members of Parliament created a middle ground of seven years abandoning the government’s earlier suggestion to tax losses carried forward in five years by adding section 38(5) (a) of the Income Tax Act which imposed the tax.

According to this section, a taxpayer who after a period of seven years of income carries forward assessed losses shall only be allowed a deduction of 50 per cent of the loss carried forward at the beginning of the following year of income in determining the taxpayer’s chargeable income in the subsequent years of income.

The Chairperson of the Committee on Finance, Hon. Amos Kankunda said the move will capture potential taxpayers who use losses as a getaway from taxation, cheating the country.
“…the amendment is intended to limit the avoidance of payment of corporation tax  by taking advantage of the current provision of the law which allows businesses to carry forward all tax losses indefinitely and without any restriction,” he said.

However, the FDC, Budadiri West Member of parliament Hon. Nathan Nandala Mafabi opposed the amendment, saying it will drive businesses to closure.

“A business will make a trading profit as per accounting standards and even pay dividends but will make a taxable loss due to taxable allowances like capital deductions,” he said.

He further asked MPs to equip the Uganda Revenue Authority with means to audit and specifically hunt down the tax evaders as an alternative.

“URA should intensify tax audits to confirm the right values of investments; this can be done by values already in their books in World Customs Organisation in Brussels,” he said.