VPNs: Government loses Shs 2 billion worth of OTT tax

A quarterly report released recently by the Uganda Communications Commission has indicated that the Ugandan government lost almost two billion shillings in taxes in three months following the introduction of the Over the Top Tax(OTT).

Starting July 2018, government introduced the social media tax where every Ugandan was charged shs200 a day to access social media sites including Facebook, Twitter, WhatsApp, Skype, Viber and Instagram after the president complained that the sites were being used for propagating falsehoods and rumourmongering.

However, following the introduction of the tax, a number of internet users opted for Virtual Private Networks(VPNs) to dodge paying the tax.

A report released last week showed that revenue got from social media tax had reduced from Shs5.6 billion in July to only shs 3.9 billion by the end of September 2018.

"In the last three months of the quarter under review, both the number of OTT taxpayers and the figure for the OTT revenues were in the declining trend," the report released on January 25 noted.

In the report, it was also indicated that in the period between July 2018 and September, only 50.4% of the internet users used OTT services by the end of September.

VPN

VPN technology allow users to securely access corporate applications and other resources.

Ugandans got introduced to Virtual Private Networks during the 2016 presidential elections when government switched off access to social media networks.

Many have never turned back since then.

When government introduced social media tax, a number of Ugandan vowed never to pay the tax as they went in for VPNs.

The Uganda Communications Commission last year threatened to block all Virtual Private Networks to enforce payment of OTT tax. However IT analysts said this was not possible.

“We have technology that will block the VPN services so that no one dodges the taxes. Different VPN systems continue to come with more advanced features to circumvent government crackdowns but governments around the world have continued to block them,” UCC Executive Director Godfrey Mutabazi said in July.

The latest report by UCC  indicates that a number of Ugandans abandoned the use of internet after the introduction of OTT tax.

President Museveni last year in a letter to the Finance Minister said he was aware some individuals were evading the new tax but said government would go for them.

“In spite of some actors wasting their time by trying to hide under VPNs where they spend much more money, we know who they are,”Museveni said in a November 25 letter to Matia Kasaija.