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Uganda: Social Media Tax Dropped; New 12% Levy on Internet

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The Ugandan Parliament has dropped the daily social media tax of Shs 200.

The tax on so-called Over-the-Top (OTT) services requires telecom subscribers to pay a daily subscription in order to access popular social media platforms, such as Facebook, Twitter, Instagram and WhatsApp.

Parliament this Thursday passed the Excise Duty (Amendment) bill, 2021, repealing item 13(b) of schedule 2 to the Excise Duty Act which provides for a shs200 daily excise duty rate for Over the Top Services (OTT).

The move will be welcomed by millions of internet users across the country. Entrepreneurs use social media to promote their products and also connect with friends and loved ones.

The social media tax was introduced in 2018, sparking domestic and global outrage.

However, Parliament introduced a 12 percent duty on internet data, a move that could increase the cost of internet in Uganda.

Internet data, except data for provision of medical and educational services will, under clause 4(f) pay an additional 12 per cent of taxes on the fee charged.

According to Uganda Communications Commission (UCC), 50 percent of the Ugandan population use internet.

A recent study by telecom regulator, Uganda Communications Commission (UCC) put the cost of acquiring 1 gigabyte of internet in Uganda at $2.67(Shs9819).

Compared to Kenya, Tanzania and Rwanda at $2.41(Shs8863), $2.18(Shs8017) and $2.18(Shs8017) respectively, Uganda’s is the highest.

More taxes on internet will worsen the situation.

State Minister of Finance in charge of Planning, Hon David Bahati said the new taxes are aimed at enabling government to address revenue shortfalls.

“Given the shortfall we had last year, I urge us to pass these tax measures,” said Bahati.

“The taxes are not meant to kill the economy but rather boost it.”

The bill passed today by lawmakers will see a Shs100 tax on fuel.

The proposal of a Shs100 duty on each kilogram of wheat was however dropped by MPs.

The MPs also agreed to reduce excise duty applicable on opaque beer from 30% or Shs 650 per litre; whichever is higher, to Shs 230 per litre to encourage value addition of locally produced raw materials.



Source – ChimpReports

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