Uganda:Mobile money tax registers massive surplus in first half

By Christine Kasemiire

Uganda Revenue Authority (URA) collected Shs104.75b from mobile money tax in first half of the 2018/19 financial year for the period running from July to December.

This was against a target of Shs54.75b, registering a surplus of about Shs50b.

However, according to data obtained from URA Over the Top Tax, also known as social media tax, performed dismally with URA collecting only Shs21.12b in the same period against a target of Shs135.21b.

The poor performance of OTT, according to Mr Vincent Seruma, the URA assistant commissioner for public and corporate affairs, was largely because of “the use of alternative means to access social media”.

Such alternatives, he said, included corporate provided Internet or hot spots which are not subjected to OTT and Virtual Private Networks (VPNs).As a result OTT registered a deficit of Shs114.09b for the period running from July to December.
Recently, Mr Abdul Waiswa, the Uganda Communication Commission legal counsel, told Daily Monitor attempts to block VPNs where futile because many have been created and from anonymous sources.

“We cannot tell how many Ugandans are using VPNs because we do not know where or who is using it. We continuously block them but more keep coming up,” he said.

Last week, Mr Frank Tumwebaze, the ICT minister, told Daily Monitor they would assess OTT with the view of giving an informed opinion to the Finance Ministry. “It is the first tax and so a proper assessment and its impact on consumption needs to be made,” he said, noting they (ICT ministry) would assess its impact on digital activity after which they would offer an informed opinion to the Ministry of Finance. The surplus in the mobile money tax, Mr Seruma said could be explained by the fact mobile money continues to be a routine for many transactions in Uganda thus providing the “base for the proper collection of the levy.

The two taxes were implemented last year in July.
Initially, the mobile money levy had been implemented at 1 per cent but was in November reviewed by Parliament to 0.5 per cent.

OTT collections 
OTT remains a controversial tax, which according to data from Uganda Communications Commission, reduced the number of Internet users by three million in the first three months of implementation. 
UCC data also shows that collection volumes, in shillings value, have been reducing mainly due to Internet users cutting back on the amount they spend or use of bypass alternatives such as Virtual Private Networks (VPN) to avoid paying the tax.