However the figure is below target-Ugx. 151.5 billion Government had hoped to collect in the same period. Ian Rumanyika, the URA communication and public affairs manager, attributed the fall to change in policy
“We did not meet our targets because in the first quarter, there was a change of policy, especially from taxing all transactions [depositing, sending and withdrawing] to only withdrawing,”
Starting July 1, 2018 government introduced a 1% tax on all mobile money transactions .however, following public outcry and pressure, government tabled an amendment bill, Excise Duty Amendment Bill No. 2, 2018 to have the mobile money tax reduced to 0.5% and only limited to withdrawals.
Mr. Rumanyika also said the amendments in mobile money have compelled URA to lower its target for the new quarter ending December. URA will now seek to collect Ugx. 30.3b in mobile money tax in the period running to December at a rate of 0.5 per cent.
Ms Sumin Namaganda, the Airtel public relations manager, said the telecom has seen negative trends in mobile money services dropping by nearly 30 per cent drop in transaction value.
Appearing before the parliamentary committee on finance scrutinizing the Excise Duty Amendment Bill, in September 2018.
Wim Vanhelleputte, chief executive officer of MTN Uganda, said there has been a drop in use of mobile money following the introduction of the tax. He said mobile money supports 5,000 Savings and Credit Cooperative Societies (Saccos) and taxing the business is a big risk.
“Because we’re still a young new industry, so if you over tax a young industry you might end up killing that industry. So we need to find the right balance between taxes and growing the industry to its full potential. What is the full potential of the industry? Let us cross the border into Kenya, today in Kenya, Lyca and Mpesa are a whole new system of doing digital payments.