Ronald Waiswa and Solomon Rukundo, Uganda Revenue Authority (URA)

2. Thursday, October 19, 2017 2
 Description of e-commerce
 Why bother with Uganda’s e-commerce sector
 Regulation of e-commerce sector in Uganda
 Lessons from other countries
 Proposed line of attack/ Strategies

3. Thursday, October 19, 2017 3
 E-commerce is an electronic way to doing business-The use of
internet and the web to transact business
 Scope in Uganda: Financial & commercial transactions and all
credit/debit card activities; retail trade, online network marketing,
sports betting, consultancy services, Telecom, Transport services
etc
 In most cases, no clear physical location and hard to trace.
 All types of commodities including animals, electronics, cars, food,
software, books and real estate are now online.

4. Indirect players
Telecom companies
- Internet providers
- Provide operating & payment
platforms
Financial institutions
- Payments largely get through
banks
- Challenge is access to data
and telling the purpose of the
money
Direct players
Sports Betting companies
- 39 companies including casinos some of
which operate online.
- Gross under declaration
- insufficient skills & manpower to tax
Online car dealers
- They are slowly kicking out the car bond
business from the market.
- These importers pay Customs taxes but very
little or no DT
- Online car dealers most often don’t show their
identity in the system but those of the
recipients. (The recipient is declared as the
importer which is largely not the case)

5. Direct players…
E-retail Shops (OLX, Kaymu, hello food,
shop24/7, Dondolo etc.)
 Provide platforms to buy or sell
 Running adverts
 Virtual landlords
 Commissions from selling products of
traditional business
 Direct sale of merchandise
 Reportedly earn money from internet
service providers for consumption of
internet data by clients
 By 2014 only 7 are registered- 3 filing.
 4 are subsidiaries of Africa Internet
Holding partly owned by MTN (33.3%) &
Rocket Africa
Direct players…
Social Media Platforms (Facebook,
Watsapp, IMO etc.)
1. Their revenue is largely from
running adverts, selling of location
data, subscription fees
2. Have taken over communication.
3. Majority are not registered in the
URA
Cloud computing services-
infrastructure as a service
-provide virtualised cloud computing
services such as hardware that can be
hired by other companies
MTN, one solution Uganda &Twenty
Third Century Systems from Zimbabwe
offer these services in Uganda.

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1) Its one of the fastest growing retail sector in the global economy
 The growth of the sector is correct for Uganda too. The internet
penetration is 39.8% (UCC, 2016) (close to 40 out 100 people with
mobile phones are subscribing to internet.
 Rise of many online platforms further reinforces the steady growth.
 Ready market was also revealed. “I posted laptop and in less than ten
minutes, over five people had expressed interest to buy it-the actual buyer
came from Rwanda”.
2) Current tax laws are inadequate (esp. VAT &ITA) and weak
administrative structure
 Designed for the paper based transactions which is not the case with e-commerce.
 Challenges include identification of parties, supplies made and consideration, place of
supply etc
 Tax base erosion- by failing to identify an operating business in Uganda
 Limited technical capacity in auditing these systems, (TID is too thin on ground)

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3) Ecommerce is supressing the tax base directly & indirectly
 Elimination of intermediaries critical for identifying suppliers &
consumers.
• Online car dealers, 55% of cars are from Japan, most people now
order online than going to bonds. (They pay custom taxes but little
or no DT)
• Traditional advertising platforms taken over

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4) Unfair taxation practice in comparison with the traditional
businesses. URA focusses largely on physically located businesses
a) Online Network Marketing (Players earn abnormal and tax free money)
“I invested only UGX 7millions in D9 and am assured of earning us dollars
170 per week for the whole year (about UGX30M) while am seated in my
office. I last visited my salary account last November 2016”
 People have multiple accounts
b) Sports betting-(over weight evasion) A key shareholder echoed “When I look at the tax that
sports betting companies pay, there is overweight tax evasion”.
The study wasn’t able to establish any government agency that collects and
stores transaction data on e-commerce.
E-commerce has a revenue potential

9. Very Weak regulation of the sector
 KCCA act is bypassed-it requires physical presence.
 Registration with URSB is largely voluntary- They wait for businesses
to come to them to register”.
 UCC does not track contents of the transactions. It only focus on
telecoms, internet service providers and broad casting companies
 IT developers and websites are not licenced
 BOU does not regulate transfers through online platforms. Its focus
is on banks, microfinance deposit taking institutions, forex Bureau and
money remitters.
 NITA-U is mandated to regulate e-commerce but its focus is
currently on integrating government systems-private system may
come after 2018/19

10. EU/UK South Africa
Effective 1st January 2015
1) Register for VAT in every EU
member state where they make
supplies , file and pay to each
tax authority
2) Register for and use the VAT
Mini One Stop Shop (VAT MOSS)
scheme.
3) Google now charges VAT and
accounts for it to EU
4) In the UK, HMRC is intensely
recommending businesses to
register for and use the UK VAT
MOSS.
- Caters for both B2B & B2C models
- Effective 1st June 2014, non-resident
suppliers of electronic services to South
African residents or where payment
originates from a South African bank
account were required to register and
account for VAT in South Africa, if the
total value of taxable supplies has
exceeded R50,000 within a 12 month
period.
- 2-conditions (Supplies “electronic
services” from a place outside of South-
Africa to a South-African Resident or
Involves a payment for the electronic
service that is made through a South
African bank”

11. Administrative measures
1. Government needs to consider
procuring a system to capture all
online transactions
2. Head hunt experts to support
URA officers.
3. Create a specialised unit to
handle e-commerce
4. Non resident suppliers of digital
services/ goods should register
5. Understand the relationship
between telecoms and financial
sector.
6. Benchmarking with other
countries
Policy measures
1. Re-examine the ITA &VAT
provisions on residence, place of
supply, registration of foreign
suppliers for VAT etc
2. Set threshold for significant
digital presence
3. Introduce a withholding tax on
digital transactions through
banks.
4. Introduce a band width or BIT tax
on websites
5. Foreign Account Tax Compliance Act
(FATCA) would be a solution.
6. Policy on accessing real time
data from banks
7. Multi agency coordination &
international consensus 11

12. Thank you!!!!!!
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