Govt fails to hit target for social media tax in first quarter

Govt fails to hit target for social media tax in first quarter

Also known as over the top (OTT) tax, social media tax was introduced in July as part of the Excise Duty Amendment Bill 2018

Government only collected Shs20.5 billion from social media tax between July and September, failing to beat the Shs24.9 billion target for the first quarter of the financial year.

Also known as over the top (OTT) tax, social media tax was introduced in July as part of the Excise Duty Amendment Bill 2018.

However, data from Uganda Revenue Authority indicated that whereas URA has a monthly target of Shs8.3 billion from the tax, it did not collect about Shs4 billion of the money from the use of platforms such as Facebook, WhatsApp, and Twitter, among others.

“One of the reasons (OTT) has not been performing well is resistance. We experienced a lot of resistance in the first quarter thus failing on our targets,” said Mr. Ian Rumanyika, the URA public and corporate affairs manager, who blamed the use of VPNs as one of the reasons for the failure to hit targets.

Read also: Use of VPNs in Uganda to increase as some telcos block porn sites

Nevertheless, he said they will continue to collect the tax since it is backed by the law.

URA has set the OTT tax target for the next quarter ending December at Shs74.9b.

Despite protests within and outside Uganda, the government has said the over the top (OTT) Shs 200 daily tax on the use of social media will stay because the country needs resources to broaden internet coverage.

However, several Ugandans who have not been able to pay the daily Shs200 have found VPNs as the ultimate solution to bypass paying the daily excise duty charge on Over-The-Top (OTT) services.

VPN is a technology that extends a private network across a public network and enables users to send and receive data across shared or public networks as if their computing devices were directly connected to the private network.

Applications running across a VPN may, therefore, benefit from the functionality, security, and management of the private network.

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