UGANDA:URA registers Shs 48bn mobile money tax shortfall

Taxation body, Uganda Revenue Authority (URA) has, in the first quarter of the 2018/19 financial year, collected Shs 103 billion from mobile money tax. The figure is Shs 48 billion short of the targeted Shs 151.5 billion.

This tax, alongside the over-the-top (OTT) services tax that seeks to regulate social media usage, was introduced on July 1 following the introduction of the Excise Duty amendment Act by government.

Information from URA showing taxes collected between July and September indicates that the authority collected Shs 103 billion from the 1% mobile money tax imposed on users of the service before the president clarified and reduced the amount to 0.5%.

Speaking to the press, URA publicist Ian Rumanyika, while referring to the revision of the tax from 1% to 0.5%, said that it could have been the reviews and debates on the tax that affected their collections.

Rumanyika acknowledged that when the 1% tax was in full effect, on both withdrawals and deposits, the authority registered more collections but in the last days of August and September when the president said only withdrawals should be taxed, there was a reduction.

According to URA, for the month of July, the one per cent charge on mobile money contributed Shs 22 billion (about $5.8 million), while the Shs 200 ($0.05) daily excise duty on social media use contributed Shs 4.3 billion ($1.1 million).

"With the new tax review from 1% to 0.5%, there is likely to be a major reduction of the URA collections in the second quarter of October to December", Rumanyika told the press.

In August, just a month after the tax had been introduced, Bank of Uganda and telecom companies reported a sharp decline in mobile money transactions by a whopping Shs 672 billion. As if that is not enough, telecom company MTN Uganda, in recent times reported a 30 per cent decline in revenue since the taxes became effective.

Commentators believe the fall below expectations is due to the growing public outcry and resentment of the new taxes. URA's revenue collection target for the 2018/19 financial year is Shs 16 trillion.

On October 2, a slight majority in parliament passed the contentious Excise Duty Amendment Bill 2018 No 2, approving a 0.5 per cent tax on mobile money transactions and the Shs 200 charge on OTT services.

President Museveni is yet to consent to the Bill as constitutionally required.