Mobile money tax: How it’s calculated and charges you need to know
Mobile money tax was recently exempted on withdraws but still remains intact on receiving and withdraws as we take you throough the 1% maths how the tax is collected
Currently, To send or receive cash using mobile money as a must you have to check-in to a taxed cyber block. While Government decided to slash off one slice of the half cake. The mobile money tax equation is known to many but understood by less as it may seem tricky in the first place. Even though, the main proposition lies between Sending an receiving money on your mobile phone, Paying for goods & services is also affected in a conical yard as we tried to search the Tax forest a little deeper than its front facing side.
According to the ministry of FInance, all mobile money services are taxed separately and their’s no bid for less but instead higher tax for a hefty transaction. Well, here is how Gov’t will chop off its 1% tax on every transaction you make via Mobile money.
Sending and Receiving Money
When sending and receiving money, the usual withdraw and sending telco fees lead the budgeted list starting from UGX 330 for the down low transactions. The moment you enter a registered mobile money number to send funds to and confirm with your pin, Gov’t calculates a 1% tax off the total sent amount before deducting Telco sending fees that follow the route to a digital destination. Then, as soon as your recipient receives a Mobile money message indicating the airlifted funds in the text body, Gov’t would have chopped a 1% tax off the received amount in return. While on withdraw URA collects a 1% tax on the initiated amount. Your service provider will charge you the normal withdraw fees as to receive the remaining cash from your withdraw point.
|Actual Balance on Receiver's Account||960,300|
|With drawable Amount||938,197|
Paying Goods and Services
Mobile money before its glory days was simply a digital transactions platform. However, as institutions embraced emerging technologies to their benefit. Users can conveniently pay for social services and goods wherever and whenever. In addition to the convenience met when clearing owed funds flying you right in front of a long Que. Gov’t charges you a hefty 1% as well on the total amount transacted. Assuming you are paying Packing fees amounting to UGX 20,000 this means URA deducts UGX 200 as 1% tax before Telecom charges of about UGX 1000 totaling to 2,1200/=.
To Pay: 20,000/=
1% Tax: 200/=
Telecom Charges: 1000/=
TOTAL PAID: UGX 21,200
Saving and Borrowing with Wewole or Mokash
Mobile loans and Savings conquered mobile money by storm when MTN first rolled out its Mokash service in partnership with CBA a few years ago. 2 years down the road, Users enjoy the comfort of borrowing with no security guarantees teased on to them. However, as URA tax only applies to withdraws and funds received from a fellow mobile money user. Wewole & Mokash are termed Banking services meaning for a moment you get the ultimate chance to dodge the 1% tax using your phone as it lonely awaits you on Withdraw or when you use the funds to Pay for goods or bills.
Bills & Financial services
Financial services, Banks withdrawals and deposits are the only services exempted from URA’s 1% tax. However, this doesn’t mean you escape tax when paying utility bills as your service provider also prepared a special bill payment fee ready to give the 1% transport to your utility provider. Contrary to the bills, when sending money from your phone to the bank or clearing a monthly SACCO/ Microfinance fee, the 1% tax doesn’t apply in that case. Henceforth, when paying your bills, the 1% tax is automatically applied after approving your transaction to a utility service provider.
Amount to clear Bill: 20,000/=
1% Tax : 200/=
TOTAL BILL COST: UGX 21,800