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Government Suggests Waiving off the Payment of OTT, Proposes new 12% tax on mobile internet

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The government of Uganda has proposed to waive off the payment of Over the Top Services (OTT) and replace it with the Excise Duty (Amendment) Bill, 2021 in the coming financial year 2021/2022.

The OTT tax also known as the controversial tax has been a topic of nationwide debate since it was imposed in 2018 as many expressed outrage. Many Ugandans did not receive the news well since this new tax would increase the already high expense of accessing the internet. The tax was introduced to reduce the spread of propaganda and misinformation through popular social media platforms like WhatsApp and Facebook.

The new proposal by the government to repeal the Shs200 tax follows last year’s revelation to Parliament’s Finance Committee about plans to drop the Over the Top Tax (OTT) and instead impose a direct tax on mobile data.

The revelation was made by the then Uganda Revenue Authority (URA) Commissioner General, Ms Doris Akol who underscored the need to have the tax policy reviewed since it was not performing well.

“Proposing to amend Schedule Two of the Excise Duty Act to look at possibly putting excise duty on data…this would counteract the effects of OTT and make it a bit more efficient to collect tax on data instead of the OTT which is highly evaded and is not performing well,” Ms Akol said.

In July 2019, URA reported a collection of only 49.5 billion Shillings out of the targeted 284 Billion Shillings from OTT.

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This meant that URA was unable to collect 234 billion from this tax measure, a shortfall of 83 per cent from the estimates.

According to the URA, many Ugandans resorted to using Virtual Private Networks (VPN) and wireless networks in their offices to avoid paying the tax. For OTT, every Ugandan using social media platforms like Facebook, and WhatsApp was expected to pay 200 Shillings daily.

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