Uganda taxman mulls introducing tax on internet data
The Ugandan taxman in a bid to bridge the shortfall it is experiencing in tax it collects from the telecommunication industry says it is planning to introduce tax on internet data as it had noticed a considerable drop in revenue collected from excise duty on voice calls. Internet users in the country might start paying higher fares as Uganda Revenue Authority moots a move to slap taxes on internet connectivity.
“This is an indicator people are using data to call not the voice calls,” Henry Saka, the commissioner domestic taxes told the parliamentary finance committee when he appeared before it.
According to URA, there is no tax on mobile data usage yet there is on other mobile phone services. For instance, voice calls have a 12 percent excise duty on mobile phones. Fixed lines are charged five percent while what the tax body described as “added value services” – where say a customer sends a message and gets a doctor’s advice or send a text a certain code and receive say football fixtures – is charged 20 per cent.
Saka said: “This was a policy and issue and they were engaging the ministry of finance to see how soon they can implement this move”
It is most likely to be in the tax measures for the financial year 2017/18. There is literally a tax on most of the products offered on phones – but internet had not been tapped.
There is a 10 per cent tax on both sending and withdrawing money. Mobile money and mobile internet are the two single most used products on the phone. Text messaging and direct voice calls have reduced in usage.
In its 2015 financial results, telecom giant MTN said it had realised a 17.4 percent increase in data revenue that contributed 28.3 percent to the [total] telecom revenue.”
Meanwhile mobile money recorded a 6.7 percent year-on-year increase in active mobile financial service (MFS) subscribers, the telecom said.
MTN is the market leader but there are telecoms whose core business is in selling data. Smart telecom promises its customers that whoever buys data, they would be able to use it to free in-calls.
Smile telecom also appeals to its customers with enticing mobile Wi-Fi (wireless) packages while Vodafone is picking a niche in data sales.
MTN and Airtel Uganda are doubling their customers’ data whenever one buys internet of 100mbs and above. All this is driving very high demand and the taxman sees this as an opportunity for another tax avenue.
Uganda’s tax-to-GDP ratio is dismal at 12.9 percent, the lower than regional average of 18 per cent. URA is looking for all avenues to widen the tax base in an economy which is highly informal. Data tax could come off as an easy tax.
At least 12.9 million representing 37.4 per cent of Ugandans are using internet, with more than half of these using mobile phones, according to Uganda communications commission (UCC) 2015 report.
Meanwhile, URA boss Doris Akol told the committee that said the authority was facing a very high attrition rate and they needed their “salaries to be revised”.
“Our skilled staff is leaving because we are not being competitive. Our salaries were last revised five years ago,” she said.
MPs said should set targets for its staff and that they be paid bonuses whenever they hit them. They warned the call for salary increment could spark similar calls from other organisations.
Workers at URA are some of the best-paid civil servants among government agencies, according a last year’s report by the parliamentary committee on state authorities and statutory enterprises.
