Uganda Government set to impose new taxes on social media platforms

The Ugandan Government is set to impose new taxes on social media platforms such as WhatsApp, Facebook, Twitter, Skype and Viber to stop what President Yoweri Museveni has called lugambo (gossip).

According to Business Daily, the proposed tax measures seek to help Museveni’s government raise between Sh400 billion and Sh1.4 trillion from social media users annually and were ordered by the president in a March 12 letter to Mr Kasaija.

“I am not going to propose a tax on internet use for educational, research or reference purposes… these must remain free,” Mr Museveni wrote.

“However, olugambo on social media (opinions, prejudices, insults, friendly chats) and advertisements by Google and I do not know who else must pay tax because we need resources to cope with the consequences of their lugambo.”

The president, however, did not explain how lugambo has affected resource mobilisation.

Mr Museveni also targets commercial buildings to boost government revenue from the Sh50 billion the taxman collects from landlords annually.

The president criticised the “concealment” of taxes in housing sector as “scandalous” and asked Finance Minister Matia Kasaija and his team to get serious.

The new tax proposals were castigated by social media users, human rights defenders and opposition leaders as “diversionary, deceptive, injurious to individual freedoms and burdensome”.

The new taxes were confirmed by Mr Kasaija, Secretary to Treasury Keith Muhakanizi and State House officials.

And on the issue of the so-called “over-the-top” platforms (OTTs) such as WhatsApp, Skype Viber, Twitter, etc— Mr Museveni wrote: “If we were to introduce a small fee of Uganda Sh100 per day from sim-cards that are used by these OTTs, that would generate about Sh400 billion additional revenue.”

He further explained that this estimate is on the basis of the minutes used by Ugandans over OTT and that this does not include undeclared calls and data by the telephone companies.

“These could be in the magnitude of $400m per year. This is all to do with airtime excise duty and tax on voice over OTT and phones (mobiles and fixed),” he added.

Mr Kasaija, who the president scolded for “lack of seriousness” in identifying tax sources and collecting more taxes for the country, also confirmed the disputed taxes measures.

Mr Kasaija, however, explained that the orders in the president’s letter are “a Cabinet directive” and that the details will be contained in the new tax bills to Parliament.

In trying to widen the tax base in the 2018/19 budget, Mr Museveni has proposed new taxes on telephones data transmission and the housing sector, which he says generates rented incomes but are not adequately taxed.

The details will be contained in the new tax bills.

Delving into the details of the new tax proposals, the president added: “The big losses on telephones are in three areas: not collecting excise duty on airtime and only collecting VAT, missing many calls because you depend on false declarations by telephone companies and not taxing voice conversations and other non-educational communications over the internet (via social media, whatsApp, Facebook etc). Why not put excise duty on (internet) air time?”

Telecoms have since reacted with consternation, rejected the tax proposals as uncalled for terming it as “double taxation”.