Uganda Government Slaps New 12% Tax on Airtime and Data Bundles, Effective from 1-July-2021.

The Ministry of Finance has slapped a harmonized excise duty rate of 12% on airtime, value-added services and internet data as substitute for Uganda’s controversially approved Over The Top (OTT) tax.

‘‘Some tax policy interventions to be implemented in FY2021/22 include rationalizing the excise duty regime on telecommunication services,’’ state minister for finance and economic planning, Mr Amos Lugoloobi told MPs as he presented the 2021/22 national budget tailored towards industrialization for inclusive growth, employment and wealth creation.

However, the newly levied taxes that take effect July 1 will exclude access to data for internet portals providing medical and education services.

Introduced in 2018, OTT tax sought to regulate access to microblogging and social networking platforms like Twitter and Facebook but was fiercely welcomed with massive protests and rejection.

According to Uganda Communications Commission (UCC), over 7.5million internet users shunned the tax and instead opted for a Virtual Private Network (VPN), this- painting uncertainty over how tax compliance of over 21 million internet users in Uganda will be achieved.

Contentiously approved on May 7 by the 10^th Parliament, critics and experts say the taxes-now- levied on telecommunication services will cripple e-commerce and fundamental freedoms.

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