If you are a Ugandan based artiste planning a show outside Uganda, the government will tax you on all your sources of income.
If you loved your music in the 90’s listening to Boyz II Men rendition “A song for mama” at Kololo grounds probably came with a feeling of some nostalgia. Just two days before their show, Pius Mayanja a.k.a Pallaso and Patrick Mulawana a.k.a Alien Skin gathered their fans at different places in Kampala. All this happened hardly a week after the Ghetto kids maiden appearance at the finals of Britan’s Got Talent. In the current Ugandan entertainment scene, performing arts is a trade that can’t be ignored. Indeed, the taxman is also keeping tabs having responded in a tweet to Pallaso, “We are coming to support you in DevelopingUgTogether”. As if to say, we know you are “making some ka money”.
The income that was earned by these artistes was in differing capacities and though it may appear similar on the face of it, the income may be taxed differently in Uganda. Boyz II Men are based out of Uganda and therefore earned their income in Uganda as non-resident entertainers.
Pallaso and Alien Skin are Ugandan based and therefore earned their income as resident Ugandan entertainers. Although resident in Uganda, assuming the Ghetto Kids earned any income from the Britain talent show, such income would be earned outside of Uganda. Technically, such income is referred to as foreign-sourced income because it would be coming to a Ugandan person from a foreign source, in this case Britain. All these income scenarios have different tax consequences in Uganda which I partly explain below.
Foreign artistes who perform in Uganda
Uganda taxes non-residents on only income derived from Ugandan sources unless such income is exempt from tax in the hands of the non-resident person. This means that income earned by non-resident entertainers such as Boyz II Men from their Kololo performance is taxable in Uganda.
International entertainers are potentially subject to withholding tax (“WHT”) at a rate of 15% deducted from their gross earnings. Additionally, 18% Value Added Tax (“VAT”) on the imported services may apply on the payment made to the non-resident entertainer. The obligation to account for the WHT and VAT on the payment made to the non-resident entertainer lies with the person making the payment.
Ugandan performing outside Uganda
If you are a Ugandan based artiste planning a show outside Uganda, the government will tax you on all your sources of income, technically referred to as a “worldwide income tax system”. This means income earned by an artiste in and outside Uganda will be subject to tax in Uganda.
For example, taking our assumption that Ghetto Kids earned income from the Britain’s Got Talent show, that income though sourced in Britain and potentially taxable in Britain, will also be subject to income tax in Uganda.
However, since Uganda has a Double Taxation Agreement (“DTA”) with the United Kingdom (“UK”), some benefits may accrue in respect to such income. A DTA generally provides for tax not to be imposed twice on the same person or income. Where this happens, then the DTA grants a tax relief to such a person by way of reducing the foreign tax suffered from their Ugandan tax liability. Technically, such a tax relief is known as a “foreign tax credit” because the tax credit arises from a foreign territory. The good news is that in some cases DTAs may provide some exemptions on income derived by artistes. So if you are reading this as an artiste, checking if Uganda has a DTA with your host performance country may save you some foreign tax.
Ugandan artistes performing shows in Uganda
Local artistes are liable to income tax on earnings from the trade just like any other resident professionals. Whether working independently or signed by a Ugandan or foreign record label as its employee, the artiste is subject to personal income tax.
If the artiste is an employee, the employer would be required to withhold Pay As You Earn (“PAYE”) between a range of 10% – 40% from their taxable employment income. A PAYE return showing the artiste’s earnings and tax due must be filed and paid by the employer. For example, where employment income is earned in June 2023, the PAYE should be declared and paid to the Uganda Revenue Authority (“URA”) by July 15, 2023. If the artiste performs in their own individual capacity, he / she will be subject to personal income tax at rates similar to the above PAYE rates.
However, since the artiste is not employed, he / she must file their own individual tax returns and pay tax due on a quarterly basis i.e. by September 30, December 31, March 31 and June 30 for a financial year beginning 1 July.
Where the artiste or his / her employer is not exempt from the local 6 percent WHT, the Ugandan sponsor or show promoter paying for the Artiste’s performance is required to deduct 6 percent WHT from such payment.
On the other hand, if the artiste’s annual gross income exceeds Shs150 million, the artiste is required to also register for VAT. Similar to WHT, where payments are made to an artiste such payments may also be subject to 6% withholding VAT (“WHVAT”) depending on who makes the payment and the amount paid to the artiste. Meaning a total cashflow set back of 12% (6% WHT and 6% WHVAT) may arise.
Also, from a VAT perspective, there are no free lunches. If show tickets are given to fans, the taxman expects you to account for 18 percent VAT on each of these tickets. This is because just like any other ticket paying fans, the artiste would also have performed for those enjoying freebies. So before you seek free entry to a show, remember that your favourite artiste’s benevolence may just set him / her back with a VAT cost of 18 percent.
The writer is the senior manager, tax at PwC.
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