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Cabinet halts taxes on mobile money but social media levy here to stay

Minister of ICT, Frank Tumwebaze addresses journalists at the Uganda Media center. He has confirmed that the 0.5% excise duty will be levied on Mobile Money withdraws; social media (OTT) tax to remain (FILE PHOTO)

KAMPALA – Cabinet sitting on Monday June 16 at State House, Entebbe defended taxes on social media but halted tax on the second of the three mobile money transactions.

Following public outrage on Mobile Money taxes, the Cabinet resolved that a 0.5% tax will be levied only on withdraw transactions.

Addressing journalists at Media Centre in Kampala on Tuesday, Mr Frank Tumwebaze, the Information Minister and National Guidance revealed that government has now agreed to stop taxing mobile money sending but did not change the tax on social media, saying it needs the money to finance budget deficits.

“Cabinet approved the amendment of the Excise Duty Act …reducing the tax payable on mobile money tax from 1% to 0.5% on withdrawals only,” said the Minister.

Finance Planning Minister David Bahati added that the government is devising means to simplify social media payment options.

“We want to get more options so that you can pay quarterly or annually, in addition to the daily, weekly and monthly subscriptions,” he said adding that “We want to facilitate that access so that payment becomes more convenient.”

Last month, Parliament approved the Government’s proposal to levy a 1% tax on all mobile money transactions and the daily sh200 over the top (OTT) services on social media, causing public uproar.
President Yoweri Museveni had earlier in a social media post called for a debate on the mobile money tax proposing that it be reduced from the 1 percent passed by Parliament to 0.5 percent.

“Mobile money tax is a different category from the social-media tax. Mobile money transfer is not a luxury. It is, in fact, a necessity and a very convenient way of sending money,” the president wrote

“I signed the law with the error because we could not delay other measures. However, when Parliament reconvenes, it will be requested to correct it.”

“The ones whose deductions had been made on the basis of 1% should have their money reimbursed,” Museveni wrote following public outrage on the taxes.

Bahati added that the Executive is to present the new amendments on the tax bill before Parliament, with hope that MPs will stand in support.

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