Government Loses Shs 2Bn In Social Media Tax

Uganda Communications Commission recently released a quarterly report which indicated that the Ugandan government lost almost two billion shillings in taxes in three months following the introduction of the Over the Top Tax (OTT).

According to the report , government introduced the social media tax Starting July 2018 where every Ugandan was charged shs200 a day to access social media sites including Face book, Twitter, WhatsApp, Skype, Viber and Instagram after the president complained that the sites were being used for propagating falsehoods and rumourmongering.

However, following the introduction of the tax, a number of internet users opted for Virtual Private Networks (VPNs) to dodge paying the tax.

A report released last week showed that revenue got from social media tax had reduced from Shs5.6 billion in July to only shs 3.9 billion by the end of September 2018.

“In the last three months of the quarter under review, both the number of OTT taxpayers and the figure for the OTT revenues were in the declining trend,” the report released on January 25 noted.
In the report, it was also indicated that in the period between July 2018 and September, only 50.4% of the internet users used OTT services by the end of September.

VPN technology allows users to securely access corporate applications and other resources.
Ugandans got introduced to Virtual Private Networks during the 2016 presidential elections when government switched off access to social media networks.

Many have never turned back since then.

When government introduced social media tax, a number of Ugandan vowed never to pay the tax as they went in for VPNs.
The Uganda Communications Commission last year threatened to block all Virtual Private Networks to enforce payment of OTT tax. However IT analysts said this was not possible.

“We have technology that will block the VPN services so that no one dodges the taxes. Different VPN systems continue to come with more advanced features to circumvent government crackdowns but governments around the world have continued to block them,” UCC Executive Director Godfrey Mutabazi said in July.

The latest report by UCC indicates that a number of Ugandans abandoned the use of internet after the introduction of OTT tax.
“In the last three months of the quarter under review, both the number of OTT tax payers and the figure for the OTT revenues were in the declining trend,” the report says. No explanation has been given as to why OTT revenue decreased.
“The figures indicate that those who have used OTT at least once in the quarter 50.4 percent of the internet subscribers were enjoying OTT services by the end of September 2018,” the report says.

Parliament’s Committee on Information and Communication Technology early this month ordered the Information and Communication Technology (ICT) Ministry to conduct an assessment on the impact of the social media tax. Parliament is currently preparing the budget for the 2019/2020 financial year.

Also President Museveni last year in a letter to the Finance Minister said he was aware some individuals were evading the new tax but said government would go for them.

“In spite of some actors wasting their time by trying to hide under VPNs where they spend much more money, we know who they are,”Museveni said in a November 25 letter to Matia Kasaija.

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