Officials from information and communication technology (ICT) and finance ministries have denied claims by the commissioner-general of Uganda Revenue Authority (URA), Doris Akol, that there is a proposal to have the social media tax directly levied on the internet data packages.
Yesterday, Fred Turyamuhweza, the Rujumbura County MP and other legislators on the Parliament ICT committee asked the permanent secretary of the ICT ministry, Vincent Bagire, to explain the circumstances under which such a move would be mooted without looking at its implication.
“There are some statements that URA made in regard to the over the top (OTT) services tax collection. I would like to pick your opinion on how this tax is going to affect internet usage if it’s levied on the data?” Turyamuhweza asked.
This followed Bagire’s presentation in which he vehemently singled out the high taxation regime in the ICT sector, mainly ICT-related equipment, but more specifically, the continued skyrocketing mobile data prices as the biggest challenge hindering the execution of their budget.
In his defense, Bagire distanced himself from matter, saying that as the ministry, the mandate and cardinal role starts and ends with policy formulation and, therefore, the finance ministry is responsible for tax regime formulation, a process they are not part of.
He told MPs that the ministry has never been consulted on URA’s OTT tax proposal which they think is already having serious negative implications on the Internet usage and growth of the sector at large.
“For all the airtime and data used by citizens we charge a certain tax percentage, so this would be double taxation because the data has been already taxed,” Bagire said.
Parliament last financial year introduced sh200 tax levy on all telecom subscribers accessing social media such as Facebook andWhatsapp.
On Tuesday, while appearing before Parliament’s committee on finance, Akol said revenue collection from OTT tax has suffered huge evasions due to the massive use of the VPN software application and, therefore, this measure would reduce the loss of revenue. URA only collected sh4.4b of the sh8.3b revenue projected to come from the OTT tax in July last year.
The government’s yearly target was to collect sh100b from OTT tax but is sh52.8b away from realizing this. Akol informed the committee that they would have to amend the laws OTTtax for it to generate more revenue.
David Bahati, the state minister of planning, called Akol’s proposal ‘misplaced’.
“There is no proposal formally being discussed in this regard. We all have to wait until when we finish the consultations and develop the bills to be tabled before Parliament,” he said.
