Uganda’s parliament just passed a tax on foreign digital service providers, joining the growing number of African governments trying to recoup some of the massive revenues tech giants are generating within their borders.
The 5% levy would apply to companies like Meta, Amazon, Uber, Google, and other tech firms that pay minimum taxes to African nations because they don’t have headquarters on the continent. Uganda’s finance minister highlighted Uber — domestic drivers generate profits that go to Silicon Valley rather than the Great Rift Valley — as the main reason the tax was necessary.
The same argument could apply to the billions of dollars generated from the data of Africa’s 570 million-and-counting internet users. Nigeria, Kenya, and Tanzania have implemented similar levies on digital services.
But the Ugandan opposition fears that companies could push the costs of taxes onto locals that rely on digital platforms, from Uber drivers to content creators. Kenya, which implemented a 1.5% levy on digital services last year, is facing protests after proposing an additional 15% tax on content creators.
In 2021, the OECD began leading negotiations on a global digital tax, which has so far been stymied by the US, which is home to many of the companies that would be directly affected. The OECD argues that a digital tax is needed to revamp brick-and-mortar tax rules for the modern global economy, making companies pay taxes where they have customers or users, rather than just where they are headquartered.