House approves mobile money, social media tax

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Parliament has passed the Excise Duty (Amendment) Bill, 2018 that imposes a tax on mobile money transactions and access to social media platforms respectively.

The bill was passed after a debate which drew mixed reactions from MPs across the political divide.

The report from the Committee on Finance, Planning and Economic Development on the bill was presented by the vice Chairperson of the committee Hon. Loy Katali (NRM, Jinja District) during a plenary session, Wednesday, 30 May 2018.

The committee observed that money had migrated from traditional payment systems like banks to digital platforms like mobile money, thus the need to levy tax on such platforms.

“The bill proposes to impose excise duty of one per cent on the value of mobile money transactions of receiving, payments and withdraws. Mobile money is an efficiency gain and should be taxed,” Katali said.

Some MPs, however, insisted that imposition of tax on sending, receiving and withdraw of money using mobile money services would be detrimental to low income earners who depend on the service.

“In my constituency, there is no bank to offer financial transactions to the locals so they depend on mobile money. If you impose this tax, how will people in rural areas keep their money?” queried Hon. David Abala (NRM, Ngora County).

“The one per cent tax on mobile money is going to reduce financial inclusion which we are seeking as a country for the most vulnerable in society,” added Hon. Monicah Amoding (NRM, Kumi District).

Some MPs on the other hand gave a node to the bill noting that it would improve the country’s revenue collection and enable payment of outstanding loans.

Hon. Maria Ann Nankabirwa (NRM, Kyankwanzi District) said that the one per cent levy on mobile money is a service gain. “How will the loans we have be serviced if we do not have the money for them,” she said.

The Leader of the Opposition, Hon. Winfred Kiiza said Ugandans needed services that could be catered for through tax revenue, noting that some companies had been exempted from paying corporate tax.

“Only five million Ugandans countrywide can access the banking sector leaving the rest to mobile money services. Why not increase taxes on tobacco and sachet waragi which is killing our people?,” Kiiza said.

The Chairperson of the Committee Hon. Henry Musasizi (NRM, Rubanda East) noted that an exemption for corporation tax on companies was not wasteful but rather depended on the purpose for which it is given.

“Some companies grow internally by ploughing back profits; others by borrowing money and others through acquisitions and mergers,” said Musasizi.

State Minister of Finance (Planning), Hon. David Bahati said profits from mobile money were growing thus making the service a good avenue from which to derive tax.

“The tax measures have been evaluated and we have considered the low income earners,” Bahati said.

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