Telecoms pay Shs951b in taxes

Friday March 8 2019

New tax measures. Government has introduced

New tax measures. Government has introduced some new tax measures such as mobile money tax from which it hopes to increase tax revenue. PHOTO BY ABUBAKER LUBOWA 

By Christine Kasemiire

Kampala. The telecommunications sector paid in the excess of Shs951b in taxes for the 2017/18 financial year, according to data obtained from Uganda Revenue Authority (URA).
The money was pooled in different tax segments including Excise Duty, Pay as You Earn and Value Added Tax.
Mr Robert Wamala Rumanyika, the URA acting manager public and corporate affairs, said the money was pooled majorly from the five active telecoms including MTN, Airtel, Utl, Africell and Smile.
However, he could not provide figures to indicate how much each telecom contributed.
“When you combine all the taxes, they paid Shs951.8b in the last financial year,” Mr Lumanyika said.
Out of the Shs951.18b, Income Iax contributed Shs113.3b, IT Rental Tax pooled Shs291.8m while Local Excise Duty contributed Shs269.3b.
Pay as You Earn contributed Shs83.59b while Value Added Tax and Withholding Tax contributed Shs318.9b and Shs86.5b, respectively.
However, data indicates that URA is on track to surpass the Shs951b collection having registered an overwhelming increase in the 2018/19 last two quarters ended December 2019.
So far, according to data, URA has collected Shs716b in the first half of the 2018/19 financial year.
“Surprisingly, from July to December, telecoms paid Shs716b,” Mr Rumanyika, said, indicating that URA is likely to close the year with more than Shs1 trillion from the telecommunications sector.
The telecom sector has in the last five years experienced some rapid growth becoming Uganda’s number one revenue source.
The sector, which has a number of revenue streams including mobile money, data and voice services, according to Uganda Communications Commission, has more than 23 million subscribers.
In July 2018, government implemented three tax measures including Over the Top, Mobile Money Tax and an increase in Excise Duty from 10 to 15 per cent, which could explain the overwhelming increase from the sector in the last two quarters leading to December 2019. Government, according to data from URA, collected Shs104.75b the period between July and December 2018, against a target of Shs54.75b.
The OTT segment, which is also known as social media tax pooled in Shs21.12b against a target of Shs135.21b in the same period.
Government has in the past two years raised concern, accusing telecoms of under declaring some of their revenue sources to pay less taxes.
The increase in tax comes after President Museveni last year said government had been losing billions of shillings in revenue in the telecommunications sector given that some companies under declare, particularly call volumes.
The government, according to President Museveni has since imported facilities to trap telecoms that under declare calls.
However, telecoms including MTN have persistently denied allegations of being involved in any activity that leads to paying less taxes.

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