Uganda plans to ease social media tax payment with annual pay

What you need to know:

Currently, there are only three windows of 24 hour, a week and a month through which a customer can pay for social media tax.
Uganda wants telecoms to introduce a fourth window of annual payments.
Facebook, one of the largest social media sites, has also warned Uganda that it will withhold its planned investments in the country over the tax.

Kampala

Uganda is working on a plan that will give customers a window through which they can make annual payments for social media taxes.

Currently, there are only three windows of 24 hours, a week and a month, through which a customer can pay for the tax.

Speaking in an interview, Mr David Bahati, the Finance state minister in charge of Planning, said government, in collaboration with telecoms, was in the process of creating a window that will allow annual payments for the tax.

“We want to make it more convenient that you can buy it for a whole year and forget about it. That is what we are working on with telecom companies,” he said.

In July, government implemented the social media tax, kicking up a storm among users.

Customers have since raised complaints against the tax, key among them, the inconvenient method of payment and how relevant it will be to technological development.

The tax, government says, was introduced to widen the tax base and increase revenue collection in the country through inclusion of taxable ventures and individuals.

The UShs200 (Sh5.4) daily charge, will in essence translates to about UShs73,000 (1988) per year.

However, Mr Bahati did not indicate if there will be any discount considered for this particular method.
Ms Sumin Namaganda, the Airtel public relations manager confirmed government had contacted them to create an annual window.
“We are working on the modalities of creating the annual social media tax fees and we shall communicate when it is complete,” she said.

READ: Facebook to hold back Uganda investment over tax

Timeframe
However, she did not indicate when it would be ready.

MTN and Africell are yet to work on the proposal but have been working on modalities that would make the current payment regime easier.

Mr Val Okecho, the MTN communication manager, said they were yet to work on the annual payment but were implementing the current tax regime and trying to ease the process of payment.”

He said the annual tax proposal was an attractive option that the telecom was open to exploring.

The social media tax has faced a lot of resistance with some customers opting to cut back on the time they spend on social media sites while others have opted for virtual private networks (VPN) to manoeuvre around the tax.

In an interview, Mr Abdusalam Waiswa, the Uganda Communications Commission (UCC) director for legal affairs, said they were working on blocking VPN access.

However, he said it has been a challenge because of the creation of multiple VPN outlets and the difference in jurisdiction.

“The process is continuous and will keep going on. The only problem is even when we block them, others keep coming up. And they are also operating from outside Uganda. So, it is hard to know who they are,” he said.

Withhold investments
Facebook, one of the largest social media sites, has also warned Uganda that it will withhold its planned investments in the country because the model on which they based them will be affected by the Shs200 daily social media tax.

Mr Kojo Boakye, the Facebook Africa public policy manager, said during a discussion to deliberate on the impact of the new tax, they had informed UCC of their intention to take their investments elsewhere.

However, Mr Godfrey Mutabazi, the UCC executive director, said Facebook had not discussed with them of such an intention even as they had met and discussed social media tax.

Meanwhile, Mr Bahati dismissed a request by Bank of Uganda to withdraw taxes on mobile money, saying this is a small tax that will not negatively affect businesses.
He said that the tax will substantially contribute to the country’s tax revenue, arguing that government was seeking ways to raise Uganda’s tax to gross domestic product ratio.
Mobile money, he said, transacts around UShs63 trillion compared to tax collection of about UShs16 trillion.
“The comments from Bank of Uganda to the Parliamentary Committee of Finance were really uncalled for. We know what we are doing and it [mobile money tax] will not affect the business of mobile money,” he said.