The 8.9 million mobile money subscribers in Uganda will pay more for the service following the introduction of a transaction levy in the 2013/14 financial budget. Finance Minister Ms Maria Kiwanuka announced a 10 per cent levy on all mobile money transactions, a tax that players are likely to pass on to users in form of high transaction fees.
The new tax will affect 8.9 million customers using MTN’s Mobile Money, Uganda Telecom’s M-Sente, Airtel/Warid’s Airtel Money/ Warid Pesa and Orange’s Orange Money.
Taxing mobile money transactions is among the measures the government has put in place to raise more revenue to meet its increase in the resource envelope to Shs13.1 trillion in the 2013/14 financial year. The government expects to generate Shs32 billion annually from the tax.
Ms Kiwanuka also introduced an International Calls Levy on international incoming calls and this is expected to generate about Shs43 billion. Industry players, however, said the introduction of a mobile money transaction levy could slowdown market growth as it will increase the cost of transactions, contrary to the low transaction costs that had made it popular among the populace. Utl’s managing director, Mr David Holliday, for instance said the new tax risks jeopardising the mobile money market because it would mean a significant increase of the cost of the service.
“Mobile money has become part of people’s everyday lives because they don’t need to carry cash. Even those who were formally unbanked have mobile money accounts with a service provider of their choice because it’s cheap. The service is still too young in Uganda to be taxed,” Mr Holliday said recently.
MTN general manager, corporate services, Mr Anthony Katamba said the tax will impact users of the mobile money service by increasing transaction costs.