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Uganda telecom companies dump OTT in preparation for a new internet tax

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Telecom companies in Uganda like Airtel Uganda have begun removing the infamous Over-the-Top (OTT) tax as advised by the government in preparation for the introduction of a 12% excise duty on internet services.

The bill was tabled by Minister of Finance Matia Kasaija and proposed the re-introduction of excise duty at a rate of 12 percent of prices charged for Internet data except Internet services used for medical or educational purposes. Parliament of Uganda recently passed the Excise Duty (Amendment) Act, 2021 (‘the Act’). The excise duty is collectable effective 1st July 2021.

With only two weeks to this new tax, Ugandans can enjoy the freedom for the meantime as Liquid Telecom, Airtel Uganda and MTN Uganda among others have all scrapped the OTT tax.

Initially, many critics predicted that the controversial OTT services tax was bound to fail, given the widespread opposition it has gathered since being instituted. With so many organisations, citizens and agencies calling for its cancellation. Nevertheless, the government continued with it.

A Market Performance Report issued by the Uganda Communications Commission indicated that the number of internet subscribers not paying the tax was at least 7.6 million of the targeted 18.9 million subscribers, it is from this that a proposal to revoke the OTT tax was chaired.

In July 2019, URA reported a collection of only Shs 49.5 billion out of the targeted Shs 284 billion from OTT. This meant that URA was unable to collect Shs 234 billion from this tax measure, a shortfall of 83 per cent from the estimates.

According to the URA, many Ugandans resorted to using Virtual Private Networks (VPN) and wireless networks in their offices to avoid paying the tax. For OTT, every Ugandan using social media platforms like Facebook, and WhatsApp was expected to pay Shs 200 daily.

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