Uganda sees mixed fortunes from new telecom taxes

February 5, 2019 in Business, Finance, Financial Services, Policy by Editor

February 05,2019 – Tax collector Uganda Revenue Authority registered mixed results after implementing the so-called Over the Top Tax, a sin tax on access to social media sites, and a 1pc levy that was later halved on mobile transactions.

Numbers for the first half of the year this week show that the mobile money levy over-performed by 102pc  with UGX 104.75 billion in the till at the end of December against a target of UGX 50.75 billion.

Receipts from OTT however posted an 84.5pc shortfall fetching just UGX 21.12 billion against a projected 135.21 billion for the first half of the year.

URA blames the shortfall in OTT to circumvention of the tax by users who opted to free wireless options and access through Virtual Private Networks VPN.

Authorities admitted efforts to block VPN’s had proved futile due to their agility and externalisation.

In a recent report, sector regulator Uganda Communications Authority UCC, said the number of internet users had fallen by 3 million during the first three months of OTT implementation. The combined effect of avoidance and impact on affordability had manifested in lower revenues from the tax head.

ICT sector Minister Mr. Frank Tumwebaze said the ministry would study the impact of OTT on consuption choices before making new reccomendations.

While the Uganda Revenue Authority attributes the robust performance of the MoMo levy on the central role of the service in Uganda’s financial system, part of the surplus could be attributed to its initial implementation that saw users charged 1pc for depositing, receiving and withdrawing money from their mobile wallets. The levy was in October reduced to 0.5pc on receiving MoMo only which could result into a significant drop in the second half.