ICT Association of Uganda Voice their Concern Over Taxes on Mobile Money and OTT Services

The newly introduced social media tax is facing lots of push-backs on micro-blogging website; Twitter, as well as from industry experts and concerned parties at large. While on the other hand, its also has attracted international attention.

Meanwhile, concerned parties like the ICT Association of Uganda (ICTAU) led by its Chairman; Albert Mucunguzi have come out to give their opinion about the proposed tax. We have seen the association disagree with most of the proposed amendments by the government – such as making it a mandatory for every Ugandan to own a UTL sim card, also raised their concern over sim card registration verification deadline, to mention a few.

In a press statement released by the association signed by their Chairman, said the Association was gravely concerned about the recently implemented taxes on Mobile Money and Over-The-Top (OTT) services.

“These taxes were enacted by the Government of Uganda without sufficient deliberation or consultation and are not supported by evidence-based research. They will undoubtedly constrain the development of our industry, economy, and society,” says the statement.

The Association gave a couple of reasons of how the proposed tax (Mobile Money tax inclusive) will affect Ugandans, and the country at large. In addition, resolved to support domestic and international efforts to repeal these taxes, including the legal petition launched by the Cyber Law Initiative.

  1. The flat tax on social media and other common internet services will disproportionately affect the large number of Ugandans who live in poverty, further widening the digital divide, while limiting the public’s ability to access information, communicate and express themselves.
  2. The new taxes on Mobile Money transactions will make these financial services less accessible to already undeserved and vulnerable populations.
  3. Both taxes increase the cost of doing business in Uganda, and the lack of a predictable policy development process threatens to make Uganda a less attractive destination for investment.
  4. Both taxes negatively impact the education sector by increasing the cost of common activities carried out by students and teachers in Uganda.
  5. Additional charges added to Mobile Money in particular threaten the survival of innovative companies in the digital payments space (commonly referred to as FinTech), and make it more difficult for innovators to create new solutions within that ecosystem.
  6. Companies and individuals engaged in eCommerce and digital communication or otherwise conduct business, job searches, etc. through social media may be negatively affected by a reduced local online audience.
  7. The increased cost of using Mobile Money services will encourage people to revert to cash and the informal economy. This increases risk and decreases the ability of government, businesses and individuals to monitor and account for economic activity.
  8. Many members of the public are still ignorant about these taxes due to the lack of consultation and sensitization. This may endanger the reputations and safety of Mobile Money agents who could be perceived as thieves and liars when trying to implement the new charges.

The Association in its press statement strongly urged the government to ensure that all future laws and regulations related to Uganda’s ICT industry originate from a predictable, deliberate process that incorporates evidence-based research and public consultation.

They claimed that they are engaging the Ministry of ICT and National Guidance together with its agencies Uganda Communication Commission (UCC), and National Information Technology Authority (NITA-U) in order to push for a sectoral dialogue on this issue and await their response.

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