Tag Archives: TAX COMPLIANCE

KRA Vs Sendy: Kenya’s High Court VAT Precedent Threatens East Africa’s Gig Economy and Digital Commerce Growth.

Kenya’s High Court has recently delivered a Key decision in the battle over VAT in the ride-hailing/digital platform economy, that risks far-reaching ripple effects across East Africa’s digital commerce landscape. 

The landmark decision fundamentally reclassifies digital platforms as primary suppliers of gig-economy services for VAT purposes. This brings them fully into the VAT net and forces gig workers/entrepreneurs and small merchants into VAT compliance, with potentially far-reaching consequences for the growth, structure, and taxation of the East African digital economy.

The immediate tax implication is that we now have two VATable transactions in every ride or delivery processed through a digital platform operating a similar business model. These are;

Supply from motor vehicle owner to tech platform (input VAT for the platform)

Supply from tech platform to end consumer (output VAT to the tax authorities on full final consideration paid by the end consumer)

This new reality is problematic from a commercial point of view, taking into consideration the nature and level of tax sophistication of most African economies.

The other immediate implication is that thousands of gig-economy participants have been hit with a VAT compliance shock overnight, and the reason is simple; e-commerce platforms lose input VAT if they trade with non-compliant taxpayers. Exposure to commercial activities of too many Non-VAT Traders or informal taxpayers makes the platform’s business model commercially unviable and wipes out margins.

Uganda’s Tax Exemption for Start-Ups: Key Insights for Entrepreneurs.

This fiscal year’s tax amendments included certain key amendments that have been hailed as a critical step in the right direction for tax administration, and particularly the tax exemptions provisions targeting start-ups and similar fledgling businesses.

​The amendment introduced new tax law aimed at fostering and supporting well formalised entrepreneurship, in the form of an income tax exemption for Uganda Citizen owned businesses started after 1st July 2025, for three-years.

Its practical application however requires a precise understanding of how the Uganda Revenue Authority (URA) interprets “new business,”, “associated entities,” and “Compliance” among other tax nomenclature. Yes, as with all incentives, the opportunity lies in the detail. This article seeks to address this detail.

AI’s Disruption of Professional Services: The Rise of Niche Expertise.

The market now favors firms and individuals who deeply understand specific domains or sectors rather than generalists trying to do everything. A “niche within a niche” allows consultants to become irreplaceable for a defined audience or challenge set.

AI may also have provided the easy answer to the all important career decision question for senior consultants and executives in larger legacy firms; Which is whether to choose boutique independence over the politics, processes, and layers of bureaucracy that come with being part of a large firm

Investing in Uganda; Tax Planning and Why Tax Should Lead Your Market Entry Strategy

The decision on corporate structure, i.e, whether to register a subsidiary vs. branch, Financing questions, i.e debt vs. equity, tax residence/domicile/location of holding entities are all strategy questions which are informed by tax considerations. 

Choosing the wrong structure can expose the investor to; Transfer pricing risk, Withholding tax inefficiencies, Loss of treaty benefits, Double taxation and generally, tax inefficiency and a higher tax burden across different tax heads.

But what happens when the company is set up in a way that causes preventable tax leakages or unnecessary friction with the tax authorities?

For any foreign investor entering the Ugandan market, undertaking corporate legal structuring advice without any input from a tax practitioner is a grave mistake.

While the structure may be viable on paper, it might ignore certain critical elements of transfer pricing regulation, international tax treaty benefits and domestic tax compliance aspects that might later work against the investor and require a costly restructuring process.

Money Lending Regulation: Key Insights for Lenders and Borrowers

Institutions or money lenders are now under a mandatory obligation to allow borrowers at least five working days after signing a lending contract, to revoke or terminate the contract by written notice delivered to the institution or money lender.

The revocation termination is effective if the borrower repays the full amount of the loan at the time of cancellation of the contract and any other administrative charges, or fees which have been reasonably incurred in arranging the loan and these must not exceed two percent of the value of the loan.

Navigating the Digital Economy: A Guide for Aspiring Entrepreneurs.

Today’s entrepreneur must be tech-savvy, capable of navigating the digital economy with ease and agility. Yet, many business school curricula remain outdated, focusing on traditional theoretical instruction without incorporating critical digital competencies which are now central to modern business.

The reality is, the majority of this week’s graduates will be entering the world of entrepreneurship as opposed to formal employment. And so to all business school students and recent graduates; Please prioritize acquiring digital skills and understanding the digital economy.

MRT TAX SUPPORTS VERTEX INC.

In collaboration with VATSQUARE, a leading VAT advisory Firm in the EU market, we have recently rendered advisory support to Vertex Inc on Uganda’s digital services taxation intricacies under the Value Added Tax(VAT) tax head, covering deemed supplier and foreign exchange statutory rules under the Value Added Tax Act.

Vertex Inc is a Nasdaq listed technology firm whose collaboration with tax experts and financial application technology providers across jurisdictions, delivers best in class tax technology solutions and services in global commerce.

We are honored to have contributed to the firm’s technical survey for the Ugandan tax year 2024-2025.

DIGITAL SERVICES TAX IN UGANDA: KEY INSIGHTS

Whereas certain companies, especially the large digital companies like Amazon, Microsoft and Google etc may or already procured registration with the URA for purposes of compliance under this law owing to their lucrative business to business contracts with large resident companies like banks and telecos, there are still countless transactions falling under this tax head from smaller firms which don’t sell as much into our market or which mostly deal with retail customers but who will simply choose not to register with URA and with the likely consequence that the consumers end up meeting this tax burden. The most obvious examples are the many audio streaming services and even social media platforms like facebook, which still makes money from Uganda even when it’s officially blocked. 

Tech and Automation in Tax: Key Business Insights

In my recent advisory work with a tech firm that offers tech based tax compliance tools/solutions in the international trade arena, I appreciated the extent to which automated VAT engines are becoming essential for companies operating or selling across multiple borders. These VAT engines and other tech tools ensure that businesses correctly price their products while meeting jurisdiction-specific tax obligations.

Many other technology firms are developing digital tax engines that automate tax compliance across multiple jurisdictions. These tools help businesses calculate VAT, customs duties, and even withholding taxes in real-time. Such solutions are invaluable for companies engaged in cross-border trade, where varying tax laws can create complex compliance challenges, especially for web based transactions.

However, while automation simplifies compliance, it also raises other key questions in other tax processes ancillary to compliance,

Brand Marketing and Advertising Services in Cross Border Trade; Where and How does consumption Occur for VAT Purposes?

Marketing and advertising services aim to build brand goodwill, which is an intangible asset tied to specific territories. It is obvious that brand visibility and consumer engagement occur within the market targeted by the advertisements and brand marketing, in this case, Uganda.

Goodwill, in law, is territorial and can be quantified financially but this is tied down to the territory in which the reporting entity operates because again in law, goodwill only exists with the existence of trading activities in a particular market. 

This means the economic benefit sought when buying marketing services is goodwill enhancement. This economic benefit is therefore realized in the market where goodwill is enhanced as a result of the brand marketing and advertising targeting that market. In this case Uganda and most certainly not in the United States.