Uganda misses social media tax revenue target

Thursday November 08 2018

A smartphone user. Uganda missed social media tax revenue target in the last quarter ended September. FILE | NATION MEDIA GROUP


Uganda government collected Ush20.5 billion ($5.4 million) from social media tax in the last quarter ended September, according to data obtained from Uganda Revenue Authority (URA).

The tax, which was implemented in July, was however, less than the Ushs24.9 billion ($6.6 million) target that URA had hoped to collect in the period.

The tax was introduced in the Excise Duty amendments of financial year 2018/19 requiring all social media users to pay UShs200 (about Sh5) per day, before accessing certain platforms such as Facebook, Whatsapp and Twitter, among others.

Uganda intends to collect about Ush100 billion ($26.6 million) before the end of the 2018/19 financial year.

However, this continues to be a difficult prospect as some social media users have cut back on how much they spend on data while others are using Virtual Private Networks (VPN) to manoeuvre around the tax.

Use of VPNs
Mr Ian Rumanyika, the URA public and corporate affairs manager, blamed the use of VPNs as one of the reasons for the failure to hit targets.


“One of the reasons (OTT) has not been performing well is resistance. We experienced a lot of resistance in the first quarter thus failing on our targets,” he said.
The performance, however, he said, registered improved returns in September, which URA expects to continue in this quarter.

“It is catching up, because they [subscribers] cannot use VPNs forever,” he said.

Asked how far they have reached in regard to blocking VPN usage, Mr Abdul Waiswa, the Uganda Communication Commission legal counsel, said there have been attempts to block VPN but others keep being created.

“We cannot tell how many Ugandans are using VPNs because we do not know where or who is using it. We continuously block them but more keep coming up,” he said.

Ugandans have been using VPNs to access blocked sites. The apps were first used when government switched off social media sites during the 2016 general elections.

Mr Rumanyika also told Daily Monitor the tax policy was reviewed to allow users pay the tax on a 24 hour basis.

Last week, telecoms said they had reviewed the payment system to validate the tax for a 24-hour window contrary to the old system, that would expire every midnight.

URA also set the target for the next quarter ending December at Ush74.9 billion ($19.9 million) according to details seen by Daily Monitor.

No review
President Yoweri Museveni has insisted that the tax will not be reviewed or abolished despite continued resistance within and beyond Uganda.

The president recently said the tax had been imposed on a luxury service (social media) thus users would have to pay.
Facebook, which holds a consortium of some of the largest social media platforms such Instagram and WhatsApp, has previously indicated its displeasure with the tax, threatening to withdraw planned investments.

The social media giant recently said the tax does not work well with some of the planned investments, among them extending free internet access to users. Telecoms have equally been affected, especially in regard to revenues.

Data has over the last five years become one of the main sources of revenue for telecoms, overtaking voice and SMS messaging.