Public Uproar as Telecoms implement Mobile Money & Social Media Tax

By DailyNewsUg Business Correspondent 

DAILYNEWS UG |Kampala, Uganda| When this writer woke up this morning, there were no received messages on Whatsapp or messenger despite loading MTN 1GB yesterday evening. Then it sunk in, that today is July 1st 2018.

There are 2.6 million active mobile Social Media users in Uganda who are bashing government over what they have described as ridiculous tax.

 The implementation was made effective at midnight, July 1, 2018.

The new social media tax affects social media platforms such as Facebook, WhatsApp, LinkedIn, Instagram, Viber, and Skype among others.

In the Budget for the financial year 2018/2019, the government of Uganda announced that it would charge those using over the top services or sites that offer voice and messaging over the internet, Shs200 daily.

As predicted by ICT Specialists, Ugandans have found virtual private networks (VPN) the ‘ultimate solution’ to bypass paying the Shs 200 daily excise duty charge on Over-The-Top (OTT) services.

The tax, christened ‘social media tax’ affects social media platforms such as Facebook, WhatsApp, LinkedIn, Instagram, Viber, Skype among others.

While government expects to collect about Shs 400 billion annually from the social media users, realisation of this target may be hard going by the efforts Ugandans are taking to avoid paying the tax.

For example, the search for ‘VPN’ on the world’s most popular search engine, Google, has skyrocketed and hit the maximum value (100) in the past few hours when the tax came into effect.

Between June 24, 2018 and June 29, 2018 at 7am the search for VPN had not gone beyond Google’s search trend value of ‘5’. In fact as at June 24 at 7am there was ‘0’ search.

‘VPN’ search hit the maximum value (100) on July 1 at 1am – just an hour after the Internet Service Providers (ISPs) switched off the social media platforms. VPN masks the user’s exact location and circumvents the blockage.

In his letter directing the Uganda Revenue Authority and Ministry of Finance to tax social media, President Museveni argued that most Ugandans using social are rumour mongers. He, however, promised to exempt those using it for educational purposes. But critics question how he will determine those using it for educational purposes.
The government also mandated the telecom companies to charge 1% tax of the transaction value of the services on the mobile money.

How to pay the social media tax

Payment for social media, according to a joint statement from three of the leading telecom companies in Uganda, MTN, Airtel and Africell, can be made via mobile money. This can be done by dialling *185*2*5# for Airtel, and *165*2*5# for MTN. The tax is Shs200 and can be paid daily, weekly (1400), or monthly (6000).

The joint statement further states that 1 percent tax would be charged from whoever deposits, receives, pays and withdrawals the money using mobile money.

“Normal transaction fees and charges apply on all services until further notice,” the statement reads in part.

This therefore means that payments for bills of other services like electricity, Television, School fees and others will also be taxed.

The Uganda electricity provider, Umeme has since released a statement informing its customers that 1 percent tax would be charged from any client who pays the electricity bills using mobile money services.

They however, add that the tax does not affect those who pay their bills through banks and E-pay.

VPN

According to the poll results, 19 percent of the 581 followers who participated said they would spend less time on social media, 11 percent said they would stop using social media while 70 percent said they would resort to using Virtual Private Network (VPN).

A random survey on social media also indicates that several Ugandans who have not been able to pay the daily Shs200 have found VPN the ultimate solution to bypass paying the daily excise duty charge on Over-The-Top (OTT) services, and have taken to social media to bash government.

Mobile phones in Uganda

Almost 24.8m or 70.9 per cent of Ugandans own mobile phones, a report by the National Information Technology Authority Uganda (NITA-U), has revealed.
The report dubbed the National IT Survey 2017/2018, sampled 2,700 people among government ministries, departments, agencies, local governments and households across the country in 2017.

The Uganda Communications Commission (UCC) 2014 Access and Usage of Communication Services Across Uganda study showed 52.3 per cent of Ugandans owned mobile phones.
The 70.9 per cent figure by NITA-U shows progress since 2014, with the rural folk outpacing urban people in terms of growth.
With 15.8 per cent of the population owning smart phones, the young (15-24 years), are at the forefront of smart phone usage at 28 per cent, the NITA-U report says. Analysts say young people have a higher appetite because they appreciate and understand what a smart phone can do.
However, analysts say their appetite could be restrained by the new taxes since they account for the highest number of unemployed population in the country.

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