Most people are still looking for ways to defy Social Media Tax and figuring out what’s included in OTT services. However, it’s not over yet. A Mobile Money Transaction tax will make its grand start alongside OTT tax. Mobile Money Tax is here.
Mobile Money services first debuted in Uganda in March 2009. According a 2013 FINSCOPE survey, Uganda’s population with access to formal financial services increased from 28 percent in 2009 to 54 percent in 2013. Mobile money services were the most significant part of this increase.
The Mobile Money Tax comes at a time when Mobile Money has more registered accounts than normal banks. This has perhaps made the hawk-eyed taxation officials see it as a lucrative sector for taxation purposes.
Following the Government’s directive, the Mobile money transaction tax will be effective on 1st July. All Mobile Money transfer providers are mandated to charge 1% tax of the transaction value on the following services;
Mobile Money Transaction Tax will be charged on:
- Depositing
- Receiving
- Payments
- Withdrawals
The Mobile Money Tax will be 1% of the transaction value of any of the above mobile money services. However, normal transaction fees and charges will still apply on all services until further notice.
MTN Uganda dominates the mobile money market in Uganda with more than half of the total mobile money users. Mobile money usage has continued to grow even after the sector was infested with fraudsters. How this tax will affect the mobile money market is a question only time can answer.
However, we can make a professional guess for now. It is most likely that the value of mobile money transactions will drop. However, with the convenience associated with mobile money, the reduction should be small.
Effects on mobile money payments.
Mobile Money services make paying for utilities and products hassle free. From the comfort of your couch, you can pay for electricity bills and school fees in a few taps. However, 1% of every payment will be taken as excise duty starting 1st July.
As a result, the tax will be deducted from the payments made on mobile money. Say you want UMEME to receive UGX 10,000 shillings, you have to send UGX 10,100. The UGX 100 will be deducted as excise tax.
Contact your service provider.
For any questions or queries regarding the Mobile Money Transaction Tax, you should contact your service provider.
