Airtel, URA dispute over social media tax declarations

Social media tax was first introduced in Uganda in 2018. Photo / File 

What you need to know:

  • Whereas over the top (OTT), also popularly known as social media tax was repealed in June 2021, Airtel and URA are still entangled in a dispute regarding how much users paid through Airtel between July 2019 and June 2021

Airtel has disputed a claim in which Uganda Revenue Authority (URA) had assessed the telecom as having under declared over the top (OTT) tax returns paid by social media users between July 2019 and June 2021. 

In a disclosure notice contained in the Airtel Prospectus, the telecom said it had disputed a URA audit carried out on its operations in respect of over-the-top (OTT) tax returns, which had returned an assessment of Shs17.6b with a shortage of Shs88.2m worth of accesses for the period. 

“Airtel objected to the assessment, however, URA maintained the assessment in its objection decision hence the appeal to the Tax Appeals Tribunal filed on August 10,” Airtel said, noting that URA had ignored a number of important details, which had been brought to its attention during the audit process. 

For instance, the telecom said, URA had failed to distinguish between attempted accesses and actual successful accesses in addition to using an audit methodology that did not follow accepted validation standards. 

Airtel further indicated that URA had miscalculated unique accesses declared in the telecom’s returns by using calendar days instead of the 24 hours. 

“[Airtel] has several grounds of appeal including that URA, in its analysis, did not distinguish between attempted accesses and actual successful accesses, the audit methodology applied did not follow any accepted validation standards and URA miscalculated unique accesses … by using calendar days instead of 24 hours,” details indicate.

The disclosure, which is remains central to Airtel’s initial public offering that opened at the close of last month, also noted that the telecom had obtained an interim order to stay enforcement of the assessment by URA after it had paid the mandatory 30 percent of the tax in dispute. 

The law requires that any tax payers who challenges a tax assessment is obliged to deposit 30 percent of the money under dispute before the Tax Appeals Tribunal. 

URA declined to comment on the matter citing rules of subjudice. 

OTT, which had been highly controversial, was repealed in June 2021 for under performance in addition to being an impediment to communication and inclusion. 

However, government later introduced a 12 percent levy on internet data. 

OTT, which was also popularly known as social media tax, was first introduced in 2018 amid criticism from both internet users and other stakeholders. 

Several government agencies, including URA had proposed that the tax be dropped, citing failure to hit intended collection targets due to high usage of virtual private networks (VPNs) to bypass the tax, which President Museveni had said would reduce rumour-mongering among Ugandans.  

In its first year of implementation, URA had indicated that the tax had massively underperformed, with the tax body collecting only Shs49.5b out of the targeted Shs284b in the 2018/2019 financial year. The performance represented an 83 percent shortfall.