163x Filetype PPTX File size 0.77 MB Source: taxconsultants.co.ug
DIGITAL ASSETS DEFINED Definition: An electronic record in which an individual has a right or interest. -Does not include an underlying asset or liability unless the asset or liability is itself an electronic record. -Held online. -Arise out of establishment of digital businesses. -Highly mobile and intangible ; physical presence of a company not necessary. -Exist in binary format and offer a right to use and this can range anywhere from motion pictures, documents and any other type of data. -The right to use is what makes data a digital asset. If there is no right to use then that data cannot be considered a digital asset. DIGITAL BUSINESS MODELS Subscription model ; users pay a subscription fee to have access to a service or content on a website e.g. Netflix & Amazon. Advertisement model ; end users generate revenue by being exposed to advertising in platforms provided by companies like YouTube and Yahoo. Access model ; content and app developers pay to have access to end users’ data such as App Store. Peer to peer services ; provide users with ability to connect with people capable of providing a service such as accommodation e.g booking.com , Airbnb. Online market places ; Amazon , Alibaba, Jumia Uganda; Financial - Mobile money , bitcoin Transport- Uber , Safe boda Accommodation -Airbnb,Jumia travel, Online Market– Jumia ,OLX LEGAL FRAMEWORK ON DIGITAL ASSETS IN UGANDA No specific rules for taxation of the digital economy. General rules under the Income Tax Act & VAT Act Apply. The OECD Model Tax Convention on Income & Capital is applicable THE CURRENT TREND IN DIGITAL ASSETS Movement from physical services to digital services. Increased use of Financial Technology (FinTech). Profit is created by charging usage or commission fees to service providers , users and advertisers. Tom Godwin; “In 2015 Uber , the world’s largest taxi Company owns no vehicles , face book the world’s most popular media owner creates no content, Alibaba, the most valuable retailer has no inventory and Airbnb the world’s largest accommodation provider owns no real estate”. ISSUES IN TAXATION OF DIGITAL ASSETS International Taxation & Sourcing Existing tax law developed primarily in a market of physical goods and in – person services and today, services are increasingly being provided digitally with minimal human intervention, through computer servers instead of physical distribution chains. The questions that this creates are; • What is the Character of the income & how its taxed? ( royalty , rent or sale) • Who earned the income and where was it earned/sourced? (Location affects how and where income is taxed under the source and PE principles. • What is the machinery’s role in source rules? Is the place of performance of a service the same as the server’s location? Can the source of the service be partly in country X and part from the server’s location? • How should income be allocated between humans and machines in the supply chain • Does it matter that a person in Country X programmed machines that are located in country Y? • What impact do outsourced services have on place of performance?
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