Effective Sartuday 17th November 2018, Mobile money tax will be charged as a 0.5% round off, as per the statements from top telecom operators. However, what does this mean to an ordinary customer who may have lost alot in the 1% dilemma? Will lead telcos step up with refunds as the story was in August this year?

In a publicized notice by MTN Uganda, the 0.5% tax has already taken effect to all customers subscribing to the Bosco hyped service. In addition, Airtel money also altered its mobile money tax frame as Africell money also joined the overall wagon for a better slot in the mobile money trends.

During the atrocious voting day following the public outcry concerning the seemingly unfair mobile money taxes in October, 164 MPs voted by roll-call and tally to support the tax, while 124 voted against the controversial tax that had been slashed to 0.5% by President Museveni.

4 months down the road since the July 1st tax was welcomed to the 2018/19 budget, mobile money customers have only wondered whether the tax is simply a road block to digital banking or a pending parliament policy. More so, the 0.5% tax dream has never come true as it’s a nightmare which visited the press for less than a month before countrywide silence about when the bill will come to life. This has brought up some controversy for the implementors also at loggerheads with themselves because of the confusion that has since come in due to the failed targets reach.

The current state of the 0.5% tax bill

While President Museveni in July managed to make it a point to inform the general public that the tax levied was not 1% but 0.5% and that it would be altered immediately. Telecoms like MTN and Airtel went ahead to process refunds a few days later in reply to the directive.

A wide percentage of mobile money users weren’t bothered or notified by the refund policy from telcos. But instead still wonder when the tax will be amended fully or scrapped off the ladder. However, during a recent parliamentary sitting State minister for Finance David Bahati revealed that this whole saga will be soon history after the 0.5% bill is scrutinized through all relevant authorities. Nonetheless, what do you think about the whole mobile money tax dilemma that is followed by OTT tax with a sharper sword?

While mobile money tax was addressed as an evil tax to the economy by several protesters. URA’s collected tax shows high compliance by mobile money users in Uganda at a time when telecoms still collect a 1% tax off Withdraws shuttering the 0.5% dream. More so, Parliament is expected to have a joint sitting over the tax policy which has so far garnered billions of shillings off mobile transactions inclusive of sending and withdraws

In a story by the Daily monitor, URA has managed to score the ultimate UGX 103billion for the past 3 months, meaning July, August, and September eliminating October. However, this means that by 2019, URA would have collected over UGX 206 billion if the compliance rate remains static. On the other hand, OTT tax collections have not been shared yet with a projection of the expected targets by 2019 and past 3 months collections

As VPNs continue to populate every now and then on smartphone stores, mobile money tax is one solution which has only had alternatives and Zero tolerance to bypassing tricks. In addition, the collected tax still raves at 1% and nobody knows when the 0.5% will apply on mobile money withdraws only. Nonetheless, what do you think about the hit URA targets, Share with us your opinions below.

Speaking to the press yesterday, minister of ICT & Information Hon Frank Tumwebaze confirmed that Parliament had voted out the 1% mobile money tax in favor of a 0.5% amendment against a move by the opposition to fully scrap off a tax that Bank of Uganda previously regarded to as a dangerous policy. However, when a member of our team tried to withdraw money today, URA deducted a 1% tax off the transaction implying the 0.5% policy has not taken effect yet.

What next after the 0.5% mobile money slash

As much as everyone hated mobile money services from the day Government lashed out to telcos in a bid to improve the then 1% tax amidst massive VPN downloads countrywide. The effect of the 0.5% may still negatively impact various customers away from relying on the service for all transactions as the story has been for the past few months from July 2018.

Although 0.5% is the new tax bounty on withdraws only and excluded on sending and mobile money payments. Over the top (OTT) services tax has no proposed amendments to either scrap off the UGX 200 or redivert the figure to data purchases. However, as mobile money tax now carries a 0.5% flag, we might see VPNs lose popularity with a similar cut off social media platforms.

As the distinct groom for change continues to overwhelmingly take over the policymakers. The president further stated a refund of illegal 1% taxes collected in favor of 0.5% only on account transactions excluding agent and bank deposits. Well, Telecommunication companies have flagged off the mobile money refunds drive with a headstart from Airtel Uganda followed by MTN that also issued refunds earlier today.

With the Tax on deposits norm: Airtel and MTN at the weekend started to refund tax deductions that had been charged on a number of mobile money deposits since the beginning of July. The money is being refunded directly to telephone numbers that could have been charged during the period with focus to deposits and the 1% sub-charges.

The progress of Telecom mobile money refunds

At the beginning of July, the ministry of finance stated that 1% tax will be charged on all mobile money transactions. However, as the president went ahead to alter the proceedings of the 2018/19 budget day. Only deposit charges have been refunded so far with no details of when the original 1% on other transactions will flag off with huge cashbacks to customers.

The mobile money tax drama and it’s expected revenue

Mobile money tax was ushered in on July 1st 2018. Since the, the Government has never looked back on choosing whether to proceed with implementing this tax more or consider the views of the people crying out loud for the high taxes imposed on a fast growing mobile banking side.

MTN Mobile money leading the highest revenue statistics followed by its one on one competitor Airtel money are set to bring in 18Bn shillings monthly to Government. Even though, the finance ministry urged all companies to refund the illegally collected taxes to customers. None of the two mobile money lords have refunded a single shilling by time of writing.

The fate of OTT Tax and Government’s plans for its in Uganda

VPN apps in Uganda are widely used for only one single reason which is to bypass social media tax currently similar to the 2016 presidental elections situation where the platforms were deliberatly blokced.

OTT tax or social media tax in Uganda was commented on as a tax that is for now not going anywhere given the many protests by opposition leaders against this tax as it still trends online. Among the few tricks UCC is reportedly working on is to block each and every VPN inorder to force users to spend UGX 200 daily on tax, a mesare that for now is unsuccessful. Therefore, all taxes remain intact and as the minister commented on Government’s measures, enough revenue has already been generated in less than 1 month from the 2018/19 budget flag off.

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.

Example:

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/=.

Example:

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.

Example:

Amount to clear Bill: 20,000/=
1% Tax : 200/=
Charges: 1600/=
TOTAL BILL COST: UGX 21,800

“We shall tax mobile money agents and telecoms, not the customers”. Minister Kasaija stated. Even though Parliament has already approved this form of tax on mobile banking we expect things to change since its only Uganda with such taxes levied on the day to day popular services.

Mobile money tax the new trick behind it

The 1% mobile money tax which we all thought was the new thing may soon get a new twist as the mister stated. 0.5% is the new rate at which transactions will be charged. According to the finance minister, it’s only mobile money agents and telecoms that will be charged.

We leave our hands crossed just weeks before the new national budget is passed that will as well include the rumored social media tax.