Uganda Revenue Authority has recorded a shortfall of more than 80% in collections of Over The Top (OTT) tax in the financial year that ended on June 30.
In an amendment of the Excise Duty (Amendment) Bill of 2018, Parliament introduced a special tax on social media platforms such as Facebook, Instagram, Twitter, WhatsApp among others which required Ugandans to part with a daily shs 200 or shs 1400 weekly and shs 6000 monthly to access these platforms.
It was projected that shs 284 billion would be collected from social media users at the end of the financial year 2018/2019 but URA announced that it had only collected Shs. 49.5 billion which represents only 17.4% of internet subscribers.
While making the announcement yesterday, Doris Akol, the URA commissioner general, attributed the loss to the intensified use of Virtual Private Networks (VPN) among Ugandans.
She said that many Ugandans have decided to VPNs as opposed to paying tax while others use wireless networks in their offices which are not affected by the social media blockade.
She said; “The story of OTT is very different. It was projected at Shs. 284 billion but we only collected Shs. 49.5 billion. OTT did not perform well at all and we think it was affected by use of Wifi and the continued use of VPNs to avoid paying taxes.”
Virtual Private Networks (VPN) extend a private network across a public network and enables users to send and receive data across shared or public networks as if their computing devices were directly connected to the private network.
Government through the telecom regulator, Uganda Communication Commission (UCC), threatened to block all VPNs and have users charged with tax evasion but a year later, no culprit has ever been apprehended.
On a contrary however, the tax on Mobile Money which was also passed with OTT tax performed much better.
Akol said that it performed at 172% with a surplus of 42%.
“We expected to collect Shs.115 billion but we collected Shs.157 billion which is a surplus of 42%,” she said.