KAMPALA — Government has rejected a proposal by telecom companies to reduce the excise duty on mobile money withdrawals, opting instead to retain the current rate as it prioritises revenue mobilisation for the 2026/27 national budget.
Executives from MTN Uganda and Airtel Uganda had appeared before Parliament’s Finance Committee on April 16, urging lawmakers to lower the tax from 0.5 percent to 0.25 percent and introduce a cap of Shs5,000 per transaction.
The proposal was presented by Airtel Uganda Managing Director Soumendra Sahu and MTN Uganda General Manager for Corporate Services Dennis Kakonge as part of submissions on tax bills linked to the upcoming budget.
“We are not asking Parliament to scrap the tax entirely, but to reduce it to 0.25 percent and cap it at Shs5,000,” Kakonge told the committee.
Telecoms argue for lower rates
Telecom operators argued that the current tax structure is discouraging usage and undermining financial inclusion, particularly among low-income users who rely heavily on mobile money services.
“A lower rate would still allow government to raise revenue while encouraging higher transaction volumes, making the tax more sustainable,” Kakonge said.
They pointed out that withdrawing Shs1 million via mobile money can cost up to Shs20,000 in combined fees and taxes, compared to about Shs3,000 charged by banks—creating a disincentive for users.
The companies also cited experiences in countries like Kenya and Nigeria, where lower transaction taxes have led to higher volumes and increased overall revenue.
Government prioritises revenue
However, officials from the Ministry of Finance, Planning and Economic Development rejected the proposal, signalling that maintaining the current tax rate is necessary to support government expenditure.
The decision comes despite the scale of mobile money usage in Uganda, where MTN Uganda alone reported 14.7 million users handling transactions worth Shs195.5 trillion in 2025.
Mixed reactions from lawmakers
Members of Parliament expressed mixed views during the committee discussions, with some supporting the telecoms’ argument on affordability and financial inclusion, while others backed government’s revenue priorities.
Public concern grows
The debate has also sparked frustration among users, with many expressing concern over the high cost of mobile money transactions, which remain a critical financial tool for millions of Ugandans.
The Finance Committee is expected to continue reviewing proposals under the tax bills before presenting its recommendations to Parliament for debate and approval.
