URA: Abolish OTT, tax mobile data

Kampala, Uganda | THE INDEPENDENT | Uganda Revenue Authority (URA) Commissioner General Doris Akol has called for the amendment, and in other cases abolition of several tax laws, including the OTT (Over-the-top media service).

She has also called for an amendment of the Tax Procedure Act to allow for installment payment of taxes over a financial year period, and for the repeal of some non tax charges on government services like verifying land titles, renewing passports and driving permits.

Appearing today with her URA team before the Parliamentary Committee on Finance to present the Budget Framework Paper for the FY 2020/21, CG Akol proposed a withdrawal of the OTT policy be considered given its rate of evasion and non performance.

She however proposed for the amendment of Schedule 2 Part 1 of the Excise duty Act in respect of the excisable goods and services to provide for mobile data taxation. She says that this would counteract the effects of OTT evasion.

URA is also pushing for an amendment the Tax Procedure Act to allow for installment payment of taxes over a financial year period. Akol said that this would ease tax payments and revenue mobilisation.

Akol revealed that the Uganda’s Net Cumulative Revenue from July – December grew at 11.21% ( from UGX 8,134.96 Billion to UGX 9,042.01 Billion) FY 2019/20.

Bold proposals

In a series of bold proposals, URA is pushing parliament to accept selective provision of incentives to investments whose social and economic benefits are significant. They said,  that this will reduce unnecessary incentives and exemptions since they contribute to narrowing the tax base.

Her proposal attracted attention from several committee members demanding for further explanation but the Finance Committee Chairperson Henry Musasizi directed that Akol reappears on Tuesday next week alongside the Minister of Finance and Secretary to Treasury Keith Muhakanizi to explain the proposal further.

In July 2019, the tax body reported a collection of only Shillings 49.5 billion out of the targeted 284 billion from OTT. This meant that URA was unable to collect 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 200 Shillings daily.

The OTT was controversial from its introduction inspiring sections of the public led by Kyadondo East MP Robert Kyagulanyi also known as Bobi Wine to take to the streets to demonstrate against the tax.

Government intends to collect Shillings 21.54 trillion in domestic revenue in the coming 2020/2021 financial year to finance the proposed Shillings 39.64 trillion election-year budget. This is slightly lower than the Shillings 40.48 trillion, budget for this financial year.

According to the Budget framework paper accessed by URN, the Finance Ministry has set a new revenue target of Shillings 21.54 trillion up from Shillings 20.4 trillion in the current financial year and according to the projections, Shillings 20.040 trillion will come from tax revenue while Shillings 1.505 trillion will come from Non-Tax Revenue (NTR).