Taxes not responsible for high cost of mobile money, says Finance minister 

Every mobile money withdrawal carries a taxable charge of 0.5 percent. Photo / File 

What you need to know:

  • Mobile money withdrawals have a 0.5 percent tax. However, mobile money stakeholders want this tax to be reduced. 

State Finance Minister in charge of General Duties Henry Musasizi has refuted the impression that mobile money transactions are expensive because of taxes. 

Speaking during a dialogue on how to achieve a progressive regulatory environment that supports affordable digital financial inclusion, Mr Musasizi, said the impression that mobile money charges are high solely because of taxes is not true.  

“A transaction of Shs10,000 will have a charge of Shs1,000 and only Shs50 will be tax. The question is how can we get service providers to further lower the costs? That is the real debate,” he said in response to presentations by mobile money stakeholders in which some had asked government to further reduce taxes on mobile money withdrawals.  

Earlier, Mr Kennedy Kipkemboi, the GSMA mobile money regulatory lead, had said taxes need to be aligned with international best taxation practices to  support sustainability in the long run.

On his part, Mr Japhet Aritho, the Airtel Mobile Commerce managing director, said that whereas the 0.5 percent levy is mostly negligible among low value transactions, it becomes extremely expensive when it comes to high value transactions. 

The mobile money tax on withdrawals remains a controversial levy with some stakeholders claiming its one of the causes for the high cost of mobile money. 

The tax had been implemented at 1 percent against  withdrawals  but was revised downwards to 0.5 percent after a massive outcry. 

However, some stakeholders have asked government to reduce the tax further or totally repeal it.  

The dialogue, which hosted Fintechs, payment systems players, Bank of Uganda, Uganda Communications Commission, Uganda Revenue Authority and telecoms, among others, also sought to find solutions to the increasing cyber fraud.


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