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Momo tax cut to 0.5%, but 200/= OTT charge stays
Harshest Budget in Years
The Cabinet has heard the cries of Ugandans and slashed the Mobile Money (Momo) tax to 0.5% and restricted it to withdrawals alone. The official government position was announced today at the Uganda Media Centre in a news conference that was addressed by Planning State Minister David Bahati and and ICT Minister Frank Tumwebaze.
“We revised this tax from one percent 1% to 0.5% and only applicable to withdrawals only!!” Bahati said.
In order to enforce the change, the minister of finance will present an amendment to the Excise Duty Act to Parliament this Thursday for debate and possible approval.
Meanwhile, Cabinet has insisted on maintaining the UGX200 daily direct tax on the Over The Top Applications otherwise called OTT such as Facebook, Twitter and WhatsApp among others.
The introduction of the 1% Exercise Duty and the OTT tax in the new Financial Year Budget has sparked protests across the country with different civil society groups, musicians and politicians.
The opponents of the tax measures say it deprived poor people of money and threatened to discourage them from using Mobile Money as a tool to engage in the money economy. But the government has insisted that it will not scrap the taxes because it needs money to provide social services.
On a more positive note, cabinet insisted that the 0.5% Momo tax will be paid on withdrawals alone not on all transactions. In addition, the government says that UGX0.5% charged earlier will be refunded to customers.
According to Bahati, the government has surpassed its target by collecting UGX5billion as opposed to UGX2.5 that had been projected.
Bahati noted at the end of the year, they anticipate to have collected UGX 118bn, slightly more money than if they were to tax deposits.
The government insists that the decision to tax Mobile Money came after the population shifted from transacting with banks where the government previously got taxes from to Mobile money.
Currently, majority of the transactions (60%) amounting to UGX54 trillion happen on the Mobile money platform.
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