Finance Minister David Bahati has told Parliament’s Committee on Finance that after reducing the Mobile Money tax to 0.5 per cent, government is mooting the idea of taxing “alternative payment platforms” like PayWay and EasyMoney.
Bahati said taxing Mobile Money alone creates inequity in taxation.
“The tax [Mobile Money] does not apply to alternative payment platforms such as EasyMoney, PayWay and Agency Banking which creates a challenge of equity,” said Bahati.
“After this amendment, next financial year, we will probably look at this,” said Bahati.
He appeared before the Committee together with Bank of Uganda Governor, Emmanuel Tumusiime Mutebile, to make final submissions on the Excise Duty (Amendment) Bill, 2018, which the Committee is considering.
The Bill was returned for amendment following intense public criticism of the law, which levied a one per cent tax on mobile money transactions.
President Yoweri Museveni took to his Twitter account to say the law, as passed by Cabinet, never sought to impose taxes on deposits and that it was 0.5 and not the one per cent that Parliament passed.
The Committee is in the final stages of authoring its report to the House, and is widely expected to reduce the tax to 0.5 per cent.
Mutebile said Cabinet has okayed amendments to the Bank of Uganda Act to cater for the growing mobile money transactions, which Minister Bahati put at Shs63 trillion in 2017.
“In February 2018, Cabinet approved an amendment to the Bank of Uganda Act to empower BoU to regulate and supervise payment systems, including mobile money services. The final draft of the Bill is expected by the end of September 2018,” said Mutebile.
MP Elly Asiku (NRM, Koboko North), said it is not good practice to have the system and then legislate as an after thought.
“By the time we were considering this, did we not look at the existing gaps? The best way would have been to have the regulatory framework in place, and this is related to the way we do things,” Asiku said.
In response, Bahati said mobile money is regulated but not ‘sufficiently’, hence the need to improve on the legislative framework.
He said government expects to get Shs115 billion on the 0.5 per cent levy on mobile money this financial year.
“The main objective of the 0.5 per cent tax on mobile money transaction is to generate revenue to finance the budget. The revenue projected from this measure is Ushs 115 billion,” he said in a statement to the Committee.