In a movement with little precedent in global Digital Economy Taxation landscape, last July 1st, 2018 Uganda introduced a tax on digital services that is that is directly targeting Social Media consumption and Mobile money flows.
The “Excise Duty Amendment 2018”, unofficially known as the Over the Top Tax, would be levied this way:
• Mobile Money deposits and payments will be taxed at 1%.
• Over the Top services (OTTs) that can supply voice and video messaging will generate a tax at a fixed daily amount of UGX200 (around €64cents) for any user/SIM card that access the social media platforms or services like WhatsApp, Facebook and others.
Telecom operators are charged with the obligation to collect.
The measure has waken-up deep critics in the country, as a pure political measure “intended to curtail the ever increasing central role of social media in political organising”; commentators are saying that Mobile Money transactions had fallen by more than 50% as a result.
In this boiling environment, the President of Uganda, Yoweri Museveni, has just published an official letter from his “hand”, to explain that there had been a “miscommunication” in charging 1% and that it would be scrapped for deposits and reduced to 0.5%.
Seems that the 1% was the addendum of 0,5% for the sender and 0,5% leavied on receiver.
The Government agreed to discuss this measure again in Parliament.
Tipping point for uncoordinated unilateral digital taxes in Africa. The likelihood of multiple tax increases as Uganda already had other taxes for GSM airtime and for digital money. Is an inequality created if the digital money receiver is a non-resident?. Why increasing data cost to users if data is the engine of new economy?.
To remark it is Uganda’s capacity to elaborate innovative approaches around Digital Economy Taxation, but what would happen if every country takes its own creative path??.
The presidential letter is worth a read.