Uganda collects $1.8 million on social media tax from its citizens

Uganda’s Minister for Finance David Bahati has announced that the country had received Ush7 billion (about $1.8 million) from the newly-introduced tax on social media mobile money transactions from its citizens.

Mr. Bahati also revealed that a Cabinet meeting at State House Entebbe agreed to apply the tax only on withdrawals and not money that was being sent.

“As long as you are not cashing out money, you will not pay the tax but if you do, you will make the contribution of 0.5percent. We expect that if we charge the levy of 0.5 percent on withdrawals only, we will still raise Ush118 billion which is slightly above Ush115 billion we had estimated,” the minister said.

According to him, about Ush11 trillion ($2.9 billion) is sent via mobile money platforms while Ush23 trillion ($6.1 billion) is withdrawn every month.

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“The estimation we had as we started, we expected to have Ush2.5 billion ($668,000) from mobile money but the week we have implemented this, we have raised Ush5 billion ($1.4 million).

“We are ahead of target. Nothing in the budget will suffer after reducing the tax from 1 percent to 0.5 percent because transaction of 23 trillion will raise Ush118 billion,” he said.

Uganda’s ICT Minister Frank Tumwebaze also explained that the initiative is supposed to discourage cash transactions for easy monitoring and security purposes.

“This business of mobile money services started as a trial. Even telecom companies were never licensed for that. Their licenses kept on being amended to value-added service. But the service has grown to 63 percent of the GDP. That tells you that networks have to be upgraded. That tells you Ugandans are saving money not banking yet the banking sector is contributing to GDP,” Mr. Tumwebaze said.