The question I've been getting after yesterday is "how do we tax Internet companies if they are not registered here?"
A thread....
A thread....
Let me re-iterate that taxing Internet companies is a good idea. In fact, even before this whole #SocialMediaTax discussion, I was wondering why African countries and Uganda, in particular, do not get revenue from them.
The problem with Uganda is that "getting money from Internet companies" has been confused with taxing users.
One of the countries that are already taxing Internet companies is Colombia. Many people erroneously call it OTT tax but it's a tax on Internet-based services.
Many proponents of #SocialMediaTax will give Colombia as an example. BUT Colombia does not tax its citizens to access any services online but they charge 19% VAT on payments made to Internet companies.
And they charge an extra 4% tax on any payments above $15. Key to note: they charge payments for services rendered by Internet companies. E.g. A company paying ads for Facebook Ads or an individual paying for Netflix. They charge when a payment is done to the Internet company.
The EU has something called VAT-MOSS (VAT Mini One Stop Shop). When anyone based in the EU pays for an Internet service e.g. a domain, ads on Google, SaaS, hosting, etc - they are charged VAT by the service provider and it is remitted to the tax authority of the payer.
They are also proposing a 3% additional tax on revenues of Internet companies obtained from their jurisdictions. This is not yet passed and it is facing some resistance.
In summary, even proponents of taxation like myself understand that government needs taxes. Calling it social media tax, OTT tax, Internet tax is not the issue. The problem with Uganda is levying the tax on the wrong person.
The excuse that the Internet companies are not registered in Uganda is weak and lazy because they do not have offices in every country where these taxes are charged.
It is dangerous for the government to say we have to tax these companies, they're paying millions in other countries and then taxing the citizens instead.
Don't be lazy, engage the Internet companies and come up with a framework to collect the tax and develop the country. Don't stress the wrong people.
@threadreaderapp unroll
