Following the Uganda Government’s enactment and implementation of a tax on social media and mobile money transactions effective 1st July 2018, the public outcry, over the past few days, has been dominant and louder than ever. The Sunday July 1st 2018 shocker when people across Uganda couldn’t access their social media accounts unless they paid a tax has birthed criticisms from all sections of the Ugandan community from businessmen to simple social media users, telecom agents, politicians, artists and diplomats among others.
This morning, the ICT Association of Uganda (ICTAU) released a statement pronouncing itself on the visibly unpopular social media tax known as OTT (Over The Top) and Mobile Money taxes.
“The ICT Association of Uganda (ICTAU) is gravely concerned about the recently implemented taxes on Mobile Money and Over-The-Top (OTT) services. These taxes were enacted by the Government of Uganda without sufficient deliberation or consultation and are not supported by evidence-based research. They will undoubtedly constrain the development of our industry, economy, and society.
- The flat tax on social media and other common internet services will disproportionately affect the large number of Ugandans who live in poverty, further widening the digital divide, while limiting the public’s ability to access information, communicate and express themselves.
- The new taxes on Mobile Money transactions will make these financial services less accessible to already underserved and vulnerable populations.
- Both taxes increase the cost of doing business in Uganda, and the lack of a predictable policy development process threatens to make Uganda a less attractive destination for investment.
- Both taxes negatively impact the education sector by increasing the cost of common activities carried out by students and teachers in Uganda.
- Additional charges added to Mobile Money in particular threaten the survival of innovative companies in the digital payments space (commonly referred to as fintech), and make it more difficult for innovators to create new solutions within that ecosystem.
- Companies and individuals engaged in e-commerce and digital communication or otherwise conduct business, job searches, etc. through social media may be negatively affected by a reduced local online audience.
- The increased cost of using Mobile Money services will encourage people to revert to cash and the informal economy. This increases risk and decreases the ability of Government, businesses and individuals to monitor and account for economic activity.
- Many members of the public are still ignorant about these taxes due to the lack of consultation and sensitization. This may endanger the reputations and safety of Mobile Money agents who could be perceived as thieves and liars when trying to implement the new charges.
The ICTAU has resolved to support domestic and international efforts to repeal these taxes, including the legal petition launched by the Cyber Law Initiative. The ICTAU also strongly urges the Government to ensure that all future laws and regulations related to Uganda’s ICT industry originate from a predictable, deliberate process that incorporates evidence-based research and public consultation. The ICTAU is also engaging the Ministry of ICT and National Guidance together with its agencies UCC and NITA-U in order to push for a sectoral dialogue on this issue and await their response.
We envision an ICT sector in Uganda that nurtures local innovation and welcomes investment, and therefore we encourage the Government of Uganda to engage more productively with its citizens to make this right.