KAMPALA- The country is losing billions of shillings in taxes on mobile money after Bank of Uganda (BoU) officials on Thursday revealed that following the introduction of the new tax, transactions declined by Shs672 billion in the first two weeks of July.
According to BoU Director of Statistics Charles Abuka, the introduction of the 1% per cent tax on Mobile Money following the announcement of the Excise Duty Amendment Act, 2018, has affected revenues of telecom companies.
“…the value of mobile money transactions declined by Shs672 billion in the first two weeks of July 2018 compared to the first two weeks of June 2018, in part, following the announcement of the Excise Duty Amendment Act, 2018, introducing a tax of one per cent of the value of the transaction that would apply on mobile money transactions,” Mr Abula said.
He was appearing before Parliament‘s Committee on Finance on Wednesday.
Mr Abuka revealed that the central bank has recommended a more broad-based taxation policy that won’t hurt sensitive sectors of the economy.
“It is not the case that high taxes help to generate revenue; it might be the case that when you lower them you get more advantages that can have positive impacts on government revenue,” Mr Abuka said.
Appearing before the same committee, MTN Uganda chief executive officer Wim Vanhelleputte revealed that they have lost 30 per cent revenue following the introduction of the tax on mobile money.
“In general, four weeks up to Sunday [July 29, 2018], after we have implemented [the new tax], we are down in terms of revenues by about 30 per cent, compared to June,” Mr Vanhelleputte said.
“We expect with a continuous downward trend…if the current tax regime is maintained; our expectation is that if the existing tax regime would remain unchanged, we will continue going down farther beyond the minus thirty per cent, maybe even 35 per cent or even 40 per cent by the end of the year,” he said.
He said that as a result of the tax, their mobile money agents are getting 40 per cent less of what they used to earn.
“As MTN, we have six million active users. I know that Bank of Uganda is declaring, rightfully, 20 [million] and more [enabled], mobile money customers. But the ones that are active, using the service, for us MTN is six million – extrapolated to the whole country we are about 10 million active users,” he said.
The government hopes to raise Shs115 billion from mobile money transactions this fiscal year.
Following public condemnation up, President Museveni said Parliament should reduce the tax from one per cent to 0.1 per cent.