Taxing the entertainment industry: There are no exemptions
By Shaban Khamiisi
Entertainment is an activity that holds the attention and interest of an audience or gives pleasure and delight and entertainment events can take the form of or include concerts and performances
The key players in the entertainment industry include artists (Kabako), Performers (Vanessa the band lady) Authors ( writers) Producers (Washington) Promoters(Mc KATS) Event managers( SILK EVENTS) Recreational space owners (Busika) Hotel owners, and comedians (Emeka), etc
Those who earn income from Uganda have tax obligations, which include registering for taxes, acquiring a tax identification number, withholding tax on payments to local and international artists, charging VAT, and remitting to URA.
Some of the taxes under the entertainment industry include;
1) Withholding Tax (WHT). It is a tax withheld at source by the person (Event holder) upon making a payment to another person (musician or artist). WHT rates vary depending on…
…citizenship, an event holder has an obligation to withhold 6% on any payment made to local artists. The 6% tax withheld must be remitted to URA within the first 15 days of the month following the period in which the payment or event was made or held.
In case it’s a foreign entertainer e.g “Costa Twitch”, The Event holder is obliged to withhold 15% of the total payment to be made to “Twitch”, and the tax withheld must be remitted to URA before the ARTIST DEPARTS THE COUNTRY.
Apart from withholding tax on artists, the event holder also has an obligation to withhold 6% on any other payments he makes to service providers ( people that give him/her chairs for hire, etc) in case these payments exceed 1m either singularly or in aggregate.
TAX HACK: The responsibility of filing and payment of the tax withheld rests primarily on the person making payment e.g. promoter, agent, event owner, or such similar person. Thus, in case of his/her failure to withhold the tax, it will be recovered from them.
In case an artist performing at an event is an employee of the event organizer say Azawi performing at an event organized by Swangz Avenue, Azawi would not be subject to the 6% WHT, however, Swangz would be required to declare Azawi’s bonuses (that’s if they are paid) in addition to his monthly salary in the PAYE return.
2) Value Added Tax (VAT). VAT is an indirect tax on consumption that is paid by the final consumer and it is charged at the rate of 18% on the supply of most goods and services in the course of business in Uganda.
Entertainment being a taxable service, the event holder or promoter will be expected to charge VAT on all his tickets and any other services served within the premises of the event. E.g At blankets and wines tickets were at 150k. However, inside the same premises, Chama nation was charging 50k to access a certain corner, so in this case, VAT would not only be charged on the 150k but as well on the 50k.
Sponsorship income
Where an events promoter receives sponsorship from any other company, he/ she must raise an invoice that is VAT inclusive through EFRIS to the sponsor, and the income is taxed at 18%. This is funny but true there are no donations in the Entertainment industry.
3) Income tax.
Income tax refers to a type of tax that governments impose on income generated by businesses and individuals within their jurisdiction. So after Declaring WHT and VAT, people generating income from Uganda will be required to file an income tax return and pay the resultant taxes if they made a profit during the year. Income tax rates vary depending on the PERSON.
POSSIBLE PENALTIES.
Failure to file a VAT return by the due date or within a further time allowed by the Commissioner is liable to a fine not exceeding Shs. 1,000,000 and failure to pay the VAT estimated attracts interest at a rate of 2% per month the tax is not paid. IN THE ENTERTAINMENT INDUSTRY, THERE ARE NO EXEMPTIONS.
The writer can be contacted via 0785751808/0751019289 or by email: shabankhamisi@gmail.com
