OTT Tax Worst Performing Tax Category for 2018/19 – URA

Nathan Ernest Olupot August 3, 2019

1 minute read

A user is pictured paying the OTT Tax to able in position of asking all the social media platforms. (PHOTO: Olupot Nathan Ernest/PC Tech Magazine)

Government revenue collection agency, Uganda Revenue Authority (URA) says that OTT Tax was among the worst-performing tax categories for 2018/19, the New Vision reports.

URA mid this week reported that they collected UGX49.5 billion out of the projected UGX284 billion of OTT levy in the 2018/2019 financial year — indicating that 17.4% of internet subscribers using social media were able to pay the levy.

URA Commissioner General Ms. Doris Akol according to the New Vision says there is a need for a deeper study of OTT. This is to find ways of improving the performance of tax, which is currently very unpopular among the population.

She attributes the poor performance to the use of Virtual Private Networks (VPN) and wireless (Wi-Fi) connections. It is with no doubt majority of Ugandans using social media have preferred to use VPNs to paying the levy.

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 platform including; WhatsApp, Facebook, Instagram, SnapChat, LinkedIn, Twitter, among others, consumers have to pay the levy.

The levy is still being fought by private entities, some government officials and bodies and the general public at large to have it removed completely.

In recent post on Facebook by the Minister of ICT and National Guidance; Hon. Frank Tumwebaze said his ministry was working with the Ministry of Finance to have the levy removed.

A report released by technology consulting and development firm, Pollicy also showed that — 86% of internet users want the tax completely removed, 7.2% felt the tax should remain, while 6.3% remained neutral.

But with all this fight, President assured the public that OTT levy will stay. He clarified this a few weeks after the bill was passed through. At the time he had come out to say that the mobile money tax should be imposed on only withdrawing — and supposed to be 0.5% and not 1%.