KAMPALA – Tax collectors, Uganda Revenue Authority have come out to clarify that the new 1% tax on mobile money transactions does not apply to deposits, transfers from personal bank accounts to mobile money accounts or to payment of taxes using the mobile money platform.
A letter to all telecommunication companies signed by URA Commissioner General Doris Akol, clarifies that payments for utilities will however be subject to the 1% excise duty.
Ms Akol added that the tax will apply to transfer of money from one mobile money account to another (sending).
“More so, payments of any taxes using MM platform including OTT Excise Duty does not constitute 1% tax, however paying for utility bills like water, electricity and other payments like TV are subjected to the tax,” Ms Akol’s statement reads in part.
Early April this year, the Finance ministry drafted a tax Bill on social media and online transactions and later the Bill, which included 1% MM transaction tax was passed by Parliament.
The new tax levy became operational on July 1, attracting a backlash from Ugandans. Several people took to social media to air their disatisfactiin with the tax.
“Taxing mobile money is taxing the movement of money instead of the value that money has created. If I have money in my wallet and I want to put on my mobile wallet, it will be taxed 1 per cent. What value has that money created for it to deserve being taxed?” Mr Thomas Kagera, a Ugandan journalist based in Kigali, Rwanda wrote on his face book page.
“If all people were keeping their money in pots at home, would government have introduced a pot tax? With taxation on the velocity of money, you only end up hurting people’s incomes without justification. Money should be taxed because of the value it has created, not because it has been moved from one pocket to another,” Mr Kagera adds his voice to many others that felt the levy was unfair.
“Taxing mobile money is taxing the movement of money instead of the value that money has created.”
The charges also targeted to see a 15% tax introduced on money transfer and withdrawing services especially on licensed operators excluding 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).
However, President Yoweri Museveni has in a statement issued on his social media page said that the 1% levy was in error and asked that the country engages in debate on whether the levy should be 0.5% instead.
However, following the public noise, the government has noticed the burden of MM tax and revised it.