Tech savvy Ugandans have the last laugh as they cheat country’s taxman out of Sh120 million in social media taxes

Since social media tax was introduced in Uganda in July this year, Uganda Revenue Authority (URA) has only managed to collect UShs20.5 billion (Sh550 million).
The Ugandan taxman has blamed the use of Virtual Private Networks (VPN) as one of the reasons for the failure to hit targets.

Tech savvy Ugandans have had the last laugh and denied the country’s taxman about Sh120 million in social media tax revenues leaving the ‘poor taxman’ to slowly lick its wounds.

Since social media tax was introduced in Uganda in July this year, Uganda Revenue Authority (URA) has only managed to collect UShs20.5 billion (Sh550 million) from the social media tax in the last quarter ended September, less than the Shs24.9b (Sh670 million) target that it had hoped to collect in the period.

The Ugandan taxman has blamed the use of Virtual Private Networks (VPN) as one of the reasons for the failure to hit targets.

“One of the reasons (OTT) has not been performing well is resistance. We experienced a lot of resistance in the first quarter thus failing on our targets,” said Mr Ian Rumanyika, the URA public and corporate affairs manager.

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URA also set the target for the next quarter ending December at Shs74.9 billion (Sh2 billion), according to Uganda’s Daily Monitor.

The social media tax which was passed in parliament in late May and implemented in July was introduced in the Excise Duty amendments of financial year 2018/19 requires all social media users in Uganda to pay UShs200 (about Sh5) per day, before accessing certain platforms such as Facebook, Whatsapp and Twitter, among others.

However, the tax proposal was met with strong opposition and criticism at home and abroad and pushed tech savvy Ugandans to opt using VPNs instead in order to manoeuvre around the tax while others decided to cut back on how much they spend on data.

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At the moment, it is not clear how many Ugandan use VPNs since new ones keep being created despite the government’s effort to block them.

“We cannot tell how many Ugandans are using VPNs because we do not know where or who is using it. We continuously block them but more keep coming up,” said Mr Abdul Waiswa, the Uganda Communication Commission legal counsel.

Uganda intends to collect about UShs100 billion (Sh2.7 billion) before the end of the 2018/19 financial year.

President Yoweri Museveni, who recently came under fire for saying men should never cook, has insisted that the tax will not be reviewed or abolished despite continued resistance within and beyond Uganda.

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The president recently said the tax had been imposed on a luxury service (social media) thus users would have to pay.

Data has over the last five years become one of the main sources of revenue for telecoms, overtaking voice and SMS messaging.

However, Facebook, which holds a consortium of some of the largest social media platforms such Instagram and WhatsApp, has previously indicated its displeasure with the tax, threatening to withdraw planned investments.