Uganda Civil Society condemns proposed taxation of Over the Top Services
17-04-2018 14:04:00 | by: Esther Nakkazi | hits: 2371 | Tags:

Civil Society organizations in Uganda have expressed deep concern over taxing Internet users saying it is likely to have a negative impact on the development of the Internet and the Information Communication Technology (ICT) sector at large.

They also say the regulation of ‘over the top’ or OTT services like WhatsApp, Skype, Viber, and Twitter may adversely affect users rights.

Uganda has proposed to amend the Excise Duty Act 2014, with respect to the introduction of excise duty to telecommunication services especially over the top services like WhatsApp, Skype, Viber, and Twitter.

According to the proposals, which could take effect on July 1, 2018, OTT services that commonly include messaging and voice calls via Whatsapp, Facebook, Skype, and Viber will attract a tax duty of UGX 200 (USD 0.05) per user per day of access.

The Uganda president, Yoweri Museveni, recently wrote to the Finance Ministry proposing to introduce ‘Olugambo’ tax translated as ‘gossip’ on social media and advertisements by Google. He said this would potentially raise UShs 400 billion or USD $108 million in revenue for the national treasury and stop rumor mongering.   

“I do not know who else must pay tax because we need resources to cope with the consequences of their lugambo,” wrote Museveni in a letter to the Ministry of Finance. In his letter, Museveni said the government needed resources “to cope with the consequences” of social media users’ “opinions, prejudices [and] insults”. He proposed a levy of UGX 100 (USD 0.025) per day per OTT user. 

The Prime Minister Ruhakana Rugunda has supported the suggestion and Frank Tumwebaze, the Minister of ICT and National Guidance said the tax is supposed to protect Ugandan innovations and challenged innovators to come up with a counter app ‘Katunyumye’ for citizens to communicate to each other instead of WhatsApp. 

There are about 18M Internet users according to the Uganda Communication Commission (UCC), out of a population of 40M. Majority of these users are utilizing social media platforms with Facebook, Pinterest, Twitter, YouTube, Instagram, among the most accessed.

Civil Society reactions;

The Internet Society Uganda Chapter says the Internet and social media are playing a key role in facilitating discussion, inspiring action and enabling engagement both at citizen-to-citizen and government-to-citizen level.

These platforms which are mainly used by the youth can spur innovation by creating the local content that will lead to the realization of Uganda’s digital vision, says Lillian Nalwoga, President, Internet Society Uganda Chapter.

Nalwoga says already, the Internet and social media are enabling many Ugandans with opportunities to do business, hence acting as a step for many young people to innovate and produce locally relevant content that is a much-needed component of efforts towards bridging the digital divide. 

Further taxation of services derived from using these platforms is thus likely to hinder the free flow of ideas needed to drive Uganda’s digital vision agenda. In addition, taxation will increase costs of data, making access harder for many to connect online, she says.

"In a country where two social media shutdowns were ordered in a space of three months during 2016, and where some social media users have been prosecuted or arrested over opinions expressed on Facebook and Twitter critical of public officials, these developments are particularly worrying," said Ashnah Kalemera a programme officer at ICT policy Centre for Eastern and Southern Africa (CIPESA)

Kalemera said already, the perceived high level of surveillance has forced many Ugandans including the media, into self-censorship, turning them away from discussing “sensitive” matters of community or national importance.

She argued that on the financial inclusion front, the proposed taxes are also likely to affect mobile money subscriptions and the cost of doing business. In Uganda and across Africa, mobile money has become the primary means of financial transactions, offering new opportunities for productivity and efficiency gains to governments, businesses, and individuals.

Civil Society says the use of social media and OTT services has also led to an increase in consumers’ demand for data services provided by mobile network operators, thus users are already paying telecom operators fees for using the broadband services over which these services operate. Increased use of OTT services also means an increase in uptake of smartphone devices. 

 With these benefits derived from free use of OTT, and in a country where Internet usage is being driven by social media use, it thus becomes important to create an environment where people can freely explore the enormous opportunities offered through the use of these platforms and their related services. 

The Internet Society Uganda Chapter further urges the government to make the Internet more affordable by dropping taxes on smartphones and other ICT devices like computers as this will go along way in making the Internet more affordable for all Ugandans thus easing access to information. 

“This will in the long-run drive business opportunities thus achieving the government’s much-needed revenue for development,” said Nalwoga. She said evidence suggests that an unimpeded Internet is a key enabler to realizing sustainable development.