Following the gazetting of the Excise Duty Amendment Act 2018 on Friday as earlier announced by the State Minister for Planning, David Bahati, telecom companies have slashed the tax charged on Mobile Money withdraws to 0.5%.
The reduction of the mobile money tax is from 1% to 0.5% on withdrawals only and takes effect today, Saturday 17th November 2018.
In a joint statement issued by MTN Uganda, Airtel and Africell, the telecom companies said that there is no more tax on Mobile Money users who are sending or receiving money and making payments.
MTN Uganda in a separate statement said “this is a welcome move that is applauded by the industry because the customers spoke, and they were listened to”.
“MTN’s hope is that the reduction in the tax will bring back mobile money customers who had been discouraged from using the service due to the high cost of the tax.”
The telecom giant added that mobile money has greatly accelerated financial inclusion by overcoming access to money barriers and also “promotes business, trade and commerce especially within the informal sectors of the economy and rural, hard to reach parts of Uganda which have no access to formal financial services”.
In June this year, Parliament passed a controversial law that imposed a 1% tax levy on all Mobile Money transactions, including deposits, sending, receiving and withdraws. However, the law sparked outcry from the public as well as the people engaged in Mobile Money businesses.
Telcos reported that Mobile Money transactions, from which they draw much of their revenue, had significantly reduced as a result of the new taxes. In the wake of the new law, there were repeated protests from opposition politicians as well as Mobile Money agents decrying what they termed as an unfair law which was piling more burden on the tax payer.
President Yoweri Museveni later announced that the 1% tax on deposits (on individual accounts) had been erroneous and needed to be scrapped. Later, government proposed new amendments that reduced the levy from 1% to 0.5% which would only be on withdraws.
The new amendments were passed by Parliament early last month, but it required the gazetting of the law for it to be implemented.