The Uganda Revenue Authority (URA) has collected UGX49.5 billion out of the projected UGX284 billion of OTT levy in the 2018/2019 financial year. URA further reports only 17.4% of internet subscribers were able to pay the levy.
URA Commissioner General Ms. Doris Akol attributes the shortfall is because of use of Virtual Private Networks (VPN) and wireless (Wi-Fi) connections.
“The story of OTT is very very different. It was targeted at UGX284 billion but we only collected UGX49.5 billion and it performed 17.4% against what was targeted. So OTT did not perform well at all,” she said
“We think it was affected by use of Wi-Fi as well as the continued use of VPNs to avoid paying the tax,” she adds.
To recall, the levy on social media was inaugurated in the 2018/2019 financial year — passed by the Parliament of Uganda with effective of July 1st, 2018.
The Excise Duty (Amendment) Act 2018—imposed a UGX200 charge on Over-the-Top services per day of access. However, consumers can choose to pay UGX1,400 weekly, UGX6,000 monthly, UGX18,000 Quarterly or UGX73,000 Annually. Therefore, to access any social media site; WhatsApp, Facebook, Instagram, SnapChat, LinkedIn, Twitter, among others, consumers have to pay the levy.
Consumers have resorted to use VPN mostly to access OTT services than paying the tax. The numbers dropping could be explained by high usage of VPNs.
In Jan. this year, the government regulatory body of the communications sector; Uganda Communication Commission (UCC) reported that OTT taxpayers and revenue figures had dropped tremendously since the levy was imposed.
The report shows the number of consumers who paid the levy dropped from 8.04 million in July 2018 to 6.84 million people in Sep. 2018. Simultaneously, the amount of revenue collected reduced from UGX5.6 billion in July to UGX3.9 billion at the end of Sep. 2018.
Observer reports that Ms. Akol says there’s a need to study OTT to see if more taxes can be realized.
“Interestingly, the people who can afford to pay OTT are the ones avoiding paying the tax,” she said — citing government extravagancy, corruption and wastage.
Government had proposed earlier this year it would exempt its member of parliament (MPs) from paying OTT levy, which caused a public outcry. The public claimed that the MPs are already paid enough in salary and should be in position to pay the levy.
The public is still asking the government to remove the tax.
According to a report that was released by technology consulting and development firm, Pollicy showed — 86% of internet users want the tax completely removed, 7.2% felt the tax should remain, while 6.3% remained neutral.
However, President Museveni said the levy on OTT is quoting him .. “here to remain.”
Museveni proposed tax back in March 2018 in a letter he wrote to Finance Minister Hon. Kasaija Matia insisting that the revenue collected would help the country cope with consequences of gossiping.