7.6 million mobile Internet subscribers do not pay OTT

Government has previously said it collected Shs49.5b from the OTT tax although the collection was below target. Photo | File

Summary

• During the period between April to July, OTT subscribers increased to 11.3 million, which translates into a growth rate of 7 per cent.   

By Justus Lyatuu

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At least 7.6 million mobile Internet subscribers do not pay Over the Top (OTT) tax, otherwise known as social media tax, according to details obtained from the Uganda Communications Commission Market Performance Report for the quarter ended June.

The report, which covers the period between April and June, indicates that out of the 18.9 million mobile Internet subscribers, only 11.3 million paid OTT. 
According to UCC, OTT subscriptions increased by more than 700,000 mobile Internet subscribers, up from 10.6 million in the first quarter to March 2020. 

The increase pushed the number of subscribers to 11.3 million, which translates to a growth rate of 7 per cent. 
It is not clear how the 7.6 million access tax-restricted social media apps. 

However, previously reports have indicate that a number of mobile Internet subscribers had shunned paying OTT, choosing to use system overlaps such as virtual private network (VPN) and in some cases utilising WiFi, which is not subjected to OTT.

In its July-September revenue performance report, Uganda Revenue Authority (URA), said it had registered a surplus in its OTT collections, which could have been driven by the rising subscriber numbers.  
During the period to September, URA said OTT had registered a surplus Shs8.27b. 

However, URA does not give a consolidated figure of how much was collected during the period from July to September but notes the surplus could be “explained by increased transactions via mobile phones through voice and text owing to limited movement of people amid Covid-19”.

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It is not clear how much URA will be seeking to collect from OTT in the 2020/21 financial year. 
However, in July 2019, URA reported a collection of Shs49.5b against a targeted Shs284b, which indicated an unusually huge shortfall. 

According the UCC report, there has been an increase in OTT subscribers with the figure growing overtime. 
For instance, in the 2019 third quarter from July to September, subscribers grew to 9.36 million, before growing to 10.6 million in the last quarter of 2019 from September to December.                      

Controversial 
OTT remains a controversial tax that many experts have said is an impediment to growth of digital technology and access to information. 
Ms Doris Akol, who was recently sacked as URA commissioner general had at some point told Parliament that there was need to review the OTT tax with the view of abolishing it and instead embedding it in purchased data. 

However, government has previously indicated the only option available is to see how OTT collections are improved but not abolishing it. 
Parliament in June 2018, introduced a Shs200 tax levy on all telecom subscribers accessing social media sites such as Facebook, Twitter, Whatsapp, Skype, and Viber, among others.  

The move followed a directive from President Museveni to Finance minister Matia Kasaija, to widen the tax revenue base, noting that social media platforms were being used for propagating falsehoods.
Government had hoped to generate between Shs400b from OTT or social media tax annually, however, the tax was met with stiff resistance from politicians and citizens. 

editorial@ug.nationmedia.com