A Ugandan citizen, Joshua Tumwine, has gone to court challenging the recent increment of tax on mobile money services.
While reading the national budget, Maria Kiwanuka, the minister of Finance, Planning and Economic Development, imposed a 10 per cent excise duty on mobile money withdrawals. The increment is expected to start on August 1.
In his petition filed at the Constitutional court on July 17, Tumwine asserts that it is wrong for Kiwanuka to tax mobile money services in the national budget of 2014/2015 since it amounts to legitimizing an illegal service, which, he adds, contravenes the Financial Intuitions Act 2004.
"Your petitioner [Tumwine] states that the minister's act of recognizing the business and taxation of mobile money services under the national budget 2014/2015 and the imposition and collection of 10 per cent excise duty on mobile money withdrawal fees are inconsistent and in contravention of the Constitution," the petition reads in part.
According to Tumwine, mobile money services currently provided in Uganda constitute a crime under the Financial Institutions Act because they are not carried out by financial institutions. He affirms that by government taxing these businesses, it was simply aiding and abetting crime.
"The mobile money services as currently provided in Uganda are risky and irregular under the law which makes them soft targets for financial fraudsters, money launderers and terrorists who endanger public life, property and national security," Tumwine says.
The petition lists the Attorney General and Uganda Revenue Authority (URA) as the respondents. Through two law firms - Muwema, Mugerwa Advocates and Solicitors and KSMO Advocates - Tumwine says Kiwanuka' s act of recognizing mobile money services undermines and interferes with the constitutional mandate of the Bank of Uganda hence contravening Articles 4, 79 and 162 of the constitution.
"It undermines and interferes with the Constitutional power of Bank of Uganda to properly regulate and monitor the financial sector," the petition claims.
By extension, Tumwine, who says he is an economist working with a private tax firm, also argues that legitimizing mobile money services undermines and interferes with parliament's constitutional duty to make laws for order, development and good governance of Uganda.
Tumwine says URA has been attached to the petition because it has a duty to advise the minister of Finance on revenue implications, tax administration and aspects of policy changes relating to all taxes. However, he claims that the tax body has not properly discharged its duty in relation to mobile money services.