The Parliament of Uganda, on 2nd October, revised the contentious Excise Duty Act and reduced the mobile money tax from 1% to 0.5%. The amended tax, which has caused outrage among nationals for the past 3 months is now to be levied only on withdrawals.
Out of the 288 members present in the House, 164 supported the tax to be retained and reduced to 0.5%, while 124 opted that the tax be scrapped.
The amendment seals a series of activity that has unfolded since July 1st when the Excise Duty Act came into effect. Following a backlash from service consumers, journalists and politicians, a directive from the President suggested that the tax was signed in error and that there was need to revise it.
He stated that “incurring a 0.5% tax on mobile money at withdrawal point does not cost much compared to physically transporting it.”
David Bahati, the State minister for Planning, stated government’s intentions of collecting UGX 115 billion from the tax to finance part of the 2018/2019 FY budget.
Possible refund?
The President’s directive mentioned that a refund was to “take effect after amendment of the law, reducing the 1% figure to 0.5%.”
Airtel Uganda took immediate action and refunded all its customers who were charged the 1% tax for making mobile money deposits and bank to wallet transfers.
MTN Uganda, meanwhile, did not make any reimbursement at the time, and has since continued to charge 1% on deposits and withdraws.
When we inquired to find out whether there is a possible refund to all those affected since the amendment has now been made, the telecom stated that they await official communication.
“We will communicate as soon as we get official communication. Regarding the refund, it will be done if the government orders us to,” responded a service agent.
Similar tax in Zimbabwe
In a related development, Zimbabwe also announced a 2 cents per dollar tax on electronic transactions as the country moves to widen its tax base.
The tax, effective 1st October, is levied due to the “increase in the informalization of the economy and huge spikes in electronic and mobile phone-based financial transactions.”
