Uganda: Only 17 Percent Paid OTT As URA Registers SHS 284 Billion Shortfall

Ugandans have continued to avoid paying the over the top services (OTT) daily taxes, with Uganda Revenue Authority (URA) collecting a mere Shs 49.5bn out of the projected Shs 284bn in the last financial year.

Last in July, government introduced the Shs 200 daily tax for use of social media platforms such as Facebook, Whatsapp, but the taxbody says they registered a shortfall of 83 per cent as only 17.4 per cent of internet subscribers were able to pay the tax.

URA commissioner general Doris Akol attributes the shortfall to use of Virtual Private Networks (VPN) and wireless networks in their offices and restaurants.

"The story for OTT is very very different, it was targeted at Shs 284bn but we only collected Shs 49.5bn and it performed 17.4% against what was targeted. So OTT did not perform well at all. We think it was affected by use of Wi-fi in internet covered areas and as well as the continued use of VPNs to avoid paying the tax." said Akol.

Akol says there is a need to study OTT more to see if more taxes can be realized. Interestingly, the people who can afford to pay OTT are the ones avoiding paying the tax - citing government extravagancy, corruption and wastage.

The levy was controversial from the start, and together with one levied on mobile money inspired some youths to take to the streets to demonstrate against the tax. When government refused to withdraw the tax, Ugandans found a way around it - using VPNs.

Meanwhile, mobile money performed much better, which is an indicator of the services' unstoppable growth. This is despite the fact that while the government had passed 1 per cent tax on every transaction, it was later reversed to just 0.5 per cent charged on withdrawals.

According to Akol the collections from mobile money were Shs 157.2 billion far above the Shs 115 billion target.

"Mobile money performed at 172%, we expected to collect Shs 115bn, we collected Shs 157bn - a surplus of 42%." added Akol.

There are other taxes on mobile money, including the 15 per cent excise duty charged for using the service which was itself increased from 10 per cent charged in the 2017/18 financial year.

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