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URA hurting as more Ugandans continue to dodge social media tax

The URA Commissioner General, Doris Akol is joined by other officials as they unveiled their report on revenue collection. (PHOTO/URA)

KAMPALA – Uganda Revenue Authority (URA) collected only UGX49.5b of the targeted UGX284b from Over the Top Tax (OTT) tax in the last financial year, an indication of Uganda’s continued avoidance of the controversial tax.

“The story for OTT is very different, it was targeted at Shs 284bn but we only collected UGX49.5bn and it performed 17.4% against what was targeted. So OTT did not perform well at all. We think it was affected by the use of Wi-fi in internet covered areas and as well as the continued use of VPNs to avoid paying the tax,” said URA commissioner general Doris Akol.

Last in July, government introduced the Shs 200 daily tax for use of social media platforms such as Facebook, Whatsapp, but the tax body says they registered a shortfall of 83 per cent as only 17.4 per cent of internet subscribers were able to pay the tax.

Ms Akol says there is a need to study OTT more to see if more taxes can be realized. Interestingly, she said the people who can afford to pay OTT are the ones avoiding paying the tax – citing government extravagance, corruption and wastage.

The levy was controversial from the start, and together with one levied on mobile money inspired some youths to take to the streets to demonstrate against the tax. When government refused to withdraw the tax, Ugandans found a way around it – using VPNs.

A client transacts with mobile money at an agent kiosk. (PHOTO/File)

Meanwhile, mobile money performed much better, which is an indicator of the services’ unstoppable growth. This is despite the fact that while the government had passed 1 per cent tax on every transaction, it was later reversed to just 0.5 per cent charged on withdrawals.

According to Akol, the collections from mobile money were UGX157.2 billion far above the UGX115 billion targets.

“Mobile money performed at 172%, we expected to collect UGX 115bn, we collected UGX 157bn – a surplus of 42%,” added Akol.

There are other taxes on mobile money, including the 15 per cent excise duty charged for using the service which was itself increased from 10 per cent charged in the 2017/18 financial year.

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