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URA now wants OTT charged directly on data instead of mobile money

By Our Reporter

Uganda Revenue Authority (URA) Commissioner General Doris Akol has admitted that over the top tax (OTT) tax is highly evaded in the country and not performing well as earlier planned.

Akol and other URA tax technocrats were on Tuesday before the Parliament’s Finance Committee chaired by MP Henry Masasizi. URA officials have now proposed a policy shift for the government to tax the internet directly instead of charging over the top tax.

Akol said her agency has failed to collect the revenue targets from OTT.

The Social Media tax requires users to pay a tax of Shs 200 per day to access OTT services. OTT services can be defined as “the transmission or receipt of voice or messages over the internet, including access to virtual private networks”.

Government in the financial year 2018/ 2019 introduced the Shs200 daily tax for use of social media platforms such as Facebook, Whatsapp, Twitter and many others, but URA said they registered a shortfall of 83 percent as only 17.4 per cent of internet subscribers were able to pay the tax. 

URA commissioner general Doris Akol attributes the shortfall to use of Virtual Private Networks (VPN) and wireless networks in their offices and restaurants.

“The story for OTT is very very different, it was targeted at Shs 284 billion but we only collected Shs 49.5 billion and it performed 17.4 percent against what was targeted. So OTT did not perform well at all. We think it was affected by use of Wi-fi in internet covered areas and as well as the continued use of VPNs to avoid paying the tax.”

Meanwhile, based on recent released data by the Uganda Communications Commission (UCC), OTT tax has had a significant impact on the number of internet users in Uganda resulting in a drop of three million internet users over a 3 month period since it was introduced.

Social Media tax is seen by sections of the Ugandan society as an infringement on their freedom of speech and expression.

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