Telecom companies have announced they have scrapped all taxes on sending, receiving, depositing and making any form of payments using mobile money services.
Parliament in May passed the Excise Duty Amendment bill that would see a one percent levy on mobile transactions but following a public outcry, the August house last month passed an amendment of a 0.5% levy on only mobile money withdrawals.
In a joint statement released by three telecom companies including Airtel, Africell and MTN Uganda, they said they had scrapped tax on all transactions apart from the 0.5% tax on withdrawals only.
“Following the amendment of the Excise Duty Act by the government of Uganda, we inform all our customers that the Mobile Money tax has been amended to 0.5% to apply on withdrawals only,” said a statement from Airtel Uganda.
“There will be no tax charged on the following transactions; sending money, depositing money receiving money and making payments.”
According to MTN, the implementation comes after President Museveni assented the Excise Duty (Amendment) Act 2018 in law to reduce the tax that went into force on July 1.
“This is a welcome move that is applauded by the industry because the customers spoke and they were listened to .MTN’s hope is that the reduction will bring back mobile money customers who had been discouraged from using the service due to the high cost of the tax ,”said the company in a separate statement.
President Museveni early this month assented to the Excise Duty (Amendment) (No.2) Act, 2018 that proposed a controversial 0.5 per cent tax on mobile money withdrawal from one percent as had earlier been put.
There was a public uproar following the passing of the tax on mobile money with many saying they are already burdened by the huge transaction fees and subsequently the number of people carrying out transactions on mobile money greatly reduced despite government’s insistence on the tax.
Bank of Uganda officials recently said that following the introduction of the new mobile money tax, transactions had declined by shs672 billion in only the first two weeks of July.
“The value of mobile money transactions declined by Shs672 billion in the first two weeks of July 2018 compared to the first two weeks of June 2018, in part, following the announcement of the Excise Duty Amendment Act, 2018, introducing a tax of one per cent of the value of the transaction that would apply on mobile money transactions,” Charles Abuka, the Director in charge of Statistics at Bank of Uganda told the Parliamentary Committee on Finance in August.