The BOU officials were appearing before the Parliamentary Committee on
finance on Wednesday to give their views about mobile money tax.
The 0.5 per cent tax on Mobile Money is
discriminative and is likely to affect financial inclusion, officials
from Bank of Uganda have said.
The officials said this
while appearing before the Parliamentary Committee on finance on
Wednesday to give their views about mobile money tax.
The
officials, who also appeared before the committee alongside their
counterparts from telecom companies, said mobile money transactions
declined by 672bn shillings in the first two weeks of implementing the
mobile money tax.
Meanwhile, MTN said it has registered
a 30 per cent decline in revenue since the implementation of the Mobile
Money Tax, just a month ago.
MTN officials said, by
implementing the Mobile Money Tax, the government put much burden on
them and their customers, thus the drop in the revenue.
They
argued that the recently implemented mobile money tax be dropped since
they already pay 15% Excise Duty and 10% withholding tax on the same
service.
In its pursuit to hit Shs16.2 trillion revenue
target for the financial year 2018/2019, the government had introduced a
1 per cent tax on mobile money deposits, withdraws and payments, before
it was reduced tom 0.5 per cent due to public outcry.
The
Excise Duty Amendment Act 2018, which brought in place the mobile money
tax was assented to by President Museveni and signed into law on June
21, 2018.
Financial experts say taxing the movement of
money discourages trade and commerce, it discourages the formalisation
of the economy and it interferes with financial intermediation.
“It
undermines the progress and successes made in the country in respect of
financial inclusion. It hurts the poorest most, and this is already
evident on the basis of the impact the tax has had in just five days. It
will result in massive loss of employment, both direct and indirect
employment in the mobile money sector, it will discourage people from
using mobile money services and it will increase the cost of doing
business in Uganda,” said Francis Kamulegeya, a UK trained Chartered Tax
Adviser and Certified Public Accountant.
Government is currently under pressure to drop even the 0.5 per cent tax they had proposed to remain only on withdrawals.
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