September 12, 2018

Government backtracks slightly on mobile money tax

July 5, 2018—The government has backed down slightly over the one percent mobile money transactions tax after a public outcry two days after its implementation in the 2018/19 National Budget and causing President Yoweri Museveni to step in with an explanation.

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Bahati said the government wants to substantially reduce dependence on foreign donors to finance the national budget.

“The actual figure was 0.5 percent, half of one percent. That is what we should debate on the mobile money. The 0.5 percent tax, not one percent is only on the sender and the receiver of money through mobile money,” Museveni said in a statement on Wednesday.

A junior Minister in the finance ministry, David Bahati said on Tuesday announced some changes mainly that mobile money deposits on individual accounts will be tax-free contrary to what was announced by the Minister of Finance, Matia Kasaija.

However, all mobile money transactions including sending money, receiving and withdrawing money, paying bills and depositing money on personal accounts would be subject to a one percent tax in addition to the other charges that have been applicable.

“People who are using mobile money transactions to deposit won’t be charged. The 1% does not apply to them,” Bahati told a news conference.

However he said the mobile money and social media tax that has caused uproar and discontent among Ugandans will be implemented and Ugandans should be more compliant if Uganda is to achieve its 2020 agenda of steady progress and self-reliance.

“We want to be able to finance 100% of our national budget and stop reliance on loans and donors. Out of UGX101 trillion of the GDP, UGX62 trillion is transacted through mobile money. So if mobile money is taxed, the revenue generated will help to develop the country,” Bahati said.

He said the government continues to engage with UCC and telecom companies in order to make it easier for the willing customers to pay the social media tax using other means other than mobile money.

 

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