A customer pictured on a mobile money stall. (Photo Courtesy)
A customer pictured on a mobile money stall. (Photo Courtesy)

Effective 17th, November 2018, telcos in Uganda implemented the revised tax measures on mobile money transactions from 1% to 0.5% on withdrawals.

The implementation comes after the assenting of the Excise Duty (Amendment) Act (2018) into law by President Museveni. This Act reduces the tax that went into effect on July 2018. Mobile money coupled a levy of 1% on sending, receiving, and withdrawal transactions. Following the public outcry, the government made a u-turn scrapping off the levy on sending, and receiving, leaving only withdrawals.

With 1% levy on withdrawal, the President said the tax is supposed to be 0.5%. Claiming 1% was a ‘miscommunication’. Therefore giving a directive to have the levy reduced. Most importantly have it done immediately. In a Parliamentary sitting to amend the Excise Duty, a majority of parliamentarians voted (done by raising of hands) to have the levy at 0.5%. While the rest of the parliamentarians wanted the bill dropped.

Tax collected from July to September

Government revenue collection agency; the Uganda Revenue Authority (URA), early this month revealed they collected UGX103 billion levy on mobile money in 3 months. This was short UGX48.5 billion of what they expected. Mr. Ian Rumanyika, URA Public Affairs Manager told media the reviews and debates on the tax could have affected their collections.

Ian said, when the 1% tax was in full effect, they registered more collections. In the last days of August and September when the President said only withdrawals should be taxed, saw a reduction.

With now the levy placed at 0.5%, the agency is likely to see a major reduction on collections in the second quarter of October to December.

MTN in a press statement, said it hopes the reduction in the tax will bring back mobile money customers who had been discouraged from using the service due to the high cost of the tax.