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Govt introduces new tax on mobile money, smart phone users to pay Shs200 per day

A customer transacts at an MTN Mobile Money kiosk in Kampala recently

Mobile money users should brace for tougher times as government plans to introduce a 1% tax on mobile money transactions such as sending and withdrawing money, PML Daily has learnt.

The tax is contained in the Excise Duty Amendment Bill which has been drafted by the Finance ministry on the directive of President Museveni to begin levying tax on airtime and social networking sites such as Twitter, Facebook, WhatsApp, Skype and Viber.

The tax will also target online transactions such as paying for utility bills like water, electricity and pay TV, all from which the government targets to raise Shs115 billion.

The charges will also see a 15% tax introduced on money transfer and withdrawing services especially on licensed operators. This excludes banks.

According to Bank of Uganda (BoU), 22 million subscribers are currently registered for Mobile Money, while mobile money transactions have now hit Shs54 trillion, representing half of the Gross Domestic Product (GDP).

In a March 12 letter to Finance minister Matia Kasaija, the President accused the Ministry of Finance and the Uganda Revenue Authority of lack of seriousness in identifying tax sources to boost the country’s economy.

And now the ministry has responded with several tax proposals contained in the new Bill, among them a suggestion that each smartphone which uses data will be required to pay Shs200 per day, from which the government expects to collect Shs270 billion per annum.

The Excise Duty Amendment Bill also proposes to increase tax levied on landlines from 5% to 12%.

In calling for taxation of social networking sites last month, Mr Museveni argued that the country loses a lot of revenue in the telecommunication sector through uncollected excise duty and accused telephone companies of dodging tax through under declarations of voice calls and data.

“The big losses on telephones are in three areas; not collecting excise duty on airtime and only collecting VAT; missing many calls because you depended on under declarations by telephone companies and not taxing voice conversations and other non-educational communications via the internet (via WhatsApp, Facebook, etc) . Why not put excise duty on airtime?” the President’s letter reads in part.

“On the issue of the so-called “over-the-top platforms (OTTs)” such as Twitter, Facebook, WhatsApp, Skype and Viber, etc, if were to introduce a small fee of Shs100 per day from SIM cards used by these OTTs, this would generate about Shs400 billion additional revenue. This does not include undeclared calls and data by telephone companies. This could be a magnitude of $400 million per year,” he adds.

 

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