OTT volumes fall to Shs4b in December, URA data indicates

Some social media users have been avoiding the tax through the use of virtual private networks. PHOTO BY ERONIE KAMUKAMA  

By Christine Kasemiire

Kampala- Over the Top Tax (OTT) collection volumes, commonly known as social media tax, have fallen from an average of Shs6.8b in September to an average of Shs4b in December 2018, according to data from Uganda Revenue Authority.

Government had envisaged a target of about Shs24.9b every quarter but was only able to collect an average of Shs20.5b in the first quarter ending September 2018, which continues to fall.

Data obtained from URA indicates collection volumes have since September fallen to a monthly average of Shs4b, representing Shs16b for the quarter ended December.
Mr Frank Tumwebaze, the ICT minister, yesterday told Daily Monitor they would assess the tax and give an opinion to the Finance Ministry.

“It is the first tax and so a proper assessment and its impact on consumption needs to be made,” he said, noting they (ICT ministry) would assess its impact on digital activity after which they would offer an informed opinion to the Ministry of Finance.

Controversial tax
OTT remains a controversial tax, which according to data from Uganda Communications Commission, reduced the number of Internet users by three million in the first three months of implementation.

UCC data also shows that collection volumes, in shillings value, have been reducing mainly due to Internet users cutting back on the amount they spend or use of bypass alternatives such as Virtual Private Networks (VPN) to avoid paying the tax.

Government, in July 2018, introduced a Shs200 tax levy on all telecom subscribers accessing social media sites such as Facebook, Twitter and Whatsapp, among others.

The tax, according to government targets, seeks to mobilise about Shs100b before the end of the 2018/19 financial year.

With a target of Shs24.9b per quarter, Uganda Revenue Authority (URA), collected only Shs20.5b in the first quarter ended September.

URA continues to face challenges in relations to realising collection targets partly due to the use of VPNs used by a number of subscribers to maneuver the tax.

Mr Ian Rumanyika, the URA public and corporate affairs manage, in November told Daily Monitor their efforts to realise targets had been frustrated by continuous use of VPNs.

However, he was optimistic that users would eventually start paying given that VPNs are an expensive alternative.

“It is catching up, because they [subscribers] cannot use VPNs forever,” he said.

Recently, Mr Abdul Waiswa, the Uganda Communication Commission legal counsel, told Daily Monitor attempts to block VPNs had proved futile because many have been created and from sources they have no control over.

“We cannot tell how many Ugandans are using VPNs because we do not know where or who is using it. We continuously block them but more keep coming up,” he said.

Will not be reviewed

President Museveni has previously insisted the tax will not be reviewed or abolished despite continued resistance within and beyond Uganda.

The President recently said the tax had been imposed on a luxury service (social media) thus users would have to pay.

Facebook, which holds a consortium of some of the world’s largest social media platforms such Instagram and WhatsApp, has previously indicated its displeasure with the tax, threatening to withdraw planned investments.

The social media giant recently said the tax does not work well with some of the planned investments, among them extending free Internet access to users.
Telecoms have equally been affected, especially in regard to revenues.

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