Government collects Shs103b mobile money tax in first three months

Monday November 5 2018

A mobile money kiosk in Kampala. FILE PHOTO

A mobile money kiosk in Kampala. FILE PHOTO  

By Christine Kasemiire

Kampala. Uganda Revenue Authority (URA) has collected Shs103b from mobile money tax in the first quarter of the 2018/19 financial year.
Data from URA indicates government has between July and September collected a combined Shs103b.
However, this is below the Shs151.5b government had hoped to collect in the same period.
Mobile money tax was introduced in July as part of the Excise Duty amendments to allow government tax new avenues from which it sought to widen the tax envelope.

URA has a revenue collection target of Shs16 trillion for the 2018/19 financial year.
Mr Ian Rumanyika, the URA communication and public affairs manager, told Daily Monitor at the weekend that the shortfall could have been a result of the September reviews that sought to reduce the tax from 1 per cent to 0.5 per cent.

“We did not meet our targets because in the first quarter, there was a change of policy, especially from taxing all transactions [depositing, sending and withdrawing] to only withdrawing,” he said.
Whereas July and August performed well, Mr Rumanyika said, there was a drift in the last days of August and September after the President said only withdrawals should be taxed.

The President also said there had been an error in implementation as government had only discussed a 0.5 per cent rate and not 1 per cent.
Mr Rumanyika also said the amendments in mobile money have compelled URA to lower its target for the new quarter ending December.
URA will seek to collect Shs30.3b in mobile money tax in the period running to December at a rate of 0.5 per cent.
Parliament on October 2, amended the Excise Duty law reducing mobile money tax to 0.5 per cent.

However, the amended law was by Saturday yet to be signed by the President, which has delayed it from being gazzeted.
Mr Don Wanyama, at the weekend told Daily Monitor he could not comment on why the President has delayed to sign the amendments a month later as he was upcountry.
However, he said, State House will release a press statement to address the matter.

Effect of mobile money tax on telecom revenues


Marked improvements. Apart from subscribers and agents, telecoms have been the biggest culprits of the mobile money tax, losing by nearly 30 per cent in terms of volumes and revenues.
Ms Elsa Mussolini, the MTN Mobile Money general manager, said at the weekend mobile money is still deteriorating in terms of performance and it is critical that government gazettes the 0.5 per cent tax amendments to stabilise the industry.

“This is critical for mobile money services that the reduction of the 1 per cent tax to 0.5 per cent on withdrawals is gazetted. It has still not been gazetted so we cannot implement it,” she said. The President was at least by Saturday yet to sign the 0.5 per cent amendments, which were passed by Parliament last month.
Ms Sumin Namaganda, the Airtel public relations manager, said the telecom has seen negative trends in mobile money services dropping by nearly 30 per cent drop in transaction value.

However, telecoms are optimistic that the tax reduction to 0.5 per cent will restore the shrinking business.
“The recent vote by Parliament for the amendment of the tax will bring back customers and drive financial inclusion,” Ms Namaganda said.
On the other hand, industry analysis indicates that there has been a drastic drop in mobile money transactions by more than half from Shs866b in June to Shs435b in September.
According to data, person to person transfers are going down with no sign of recovery.

December, which is the month with the highest money transfers, is projected to have even lower transaction volumes with Shs392b if the amendment to 0.5 per cent is not implemented.
However, if the amendment is implemented before mid -November, mobile money transactions are projected to raise to Shs871b in December.