KAMPALA – The Ministry of Finance recently introduced 12% on internet tax levy under the amendment bill 2021 Excise Duty becomes operational effective – today, July 1.
The measure, amongst other things introduced a Ugx100 tax on every litre of fuel.
However, the 12 percent tax will be exempted when purchasing data for medical and education services.
Kampala Central MP Muhammad Nsereko recently rejected the internet tax – saying it does not help for a country whose internet costs were already high. But his pleas were unheard as the Ministry of Finance – through junior Minister – Amos Lugoloobi announced a harmonized excise duty rate of 12% on airtime, value-added services and internet data as alternative for OTT as he read the 2021/22 budget at Kololo Independence grounds.
‘‘Some tax policy interventions to be implemented in FY2021/22 include rationalizing the excise duty regime on telecommunication services,’’ state minister for finance and economic planning – Lugoloobi told MPs as he presented the 2021/22 national budget tailored towards industrialization for inclusive growth, employment and wealth creation.
Introduced in 2018, OTT tax sought to regulate access to microblogging and social networking platforms like Twitter and Facebook but was fiercely welcomed with massive protests and rejection.
According to Uganda Communications Commission (UCC), over 7.5million internet users shunned the tax and instead opted for a Virtual Private Network – VPN, this – painting uncertainty over how tax compliance of over 21 million internet users in Uganda will be achieved.
Contentiously approved on May 7 by the 10th Parliament, critics and experts say the taxes-now- levied on telecommunication services will cripple e-commerce and fundamental freedoms.
‘‘I’ve never supported these internet taxes because they kill our innovation as a country. Much of our work today is data reliant. The future depends on internet. They just want to control us,’’ AV Performance analyst Bridget Nattabi, 25, argues.
In April, former state minister for Finance – David Bahati said the new tax that’s expected to generate over Ugx300billion of Uganda’s projected Ugx22,425 billion domestic revenue collections – would be ‘virtually’ cheaper for citizens.
“From research, on a monthly basis, we use Ugx8, 000. So in imposing 12 per cent, we’re actually charging Ugx738, which is cheaper than when somebody is using OTT,’’ he said.
Over the next fiscal year, only Ugx134.9 billion has been allocated to Uganda’s economic digitization ambition of the nation’s Ugx44.8 trillion budget.
‘‘The major priorities for Financial Year 2021/22 will include the extension of broadband ICT infrastructure up to the sub-county level; expanding the Digital Terrestrial Television and Radio Broadcasting network to facilitate tele-education for learners; and facilitating the development of software solutions to support electronic operations,’’ noted Lugoolobi as he read the 2021/22 budgetary estimates at Kololo.