The Excise Duty (Amendment) Bill, 2018 amends the Excise Duty Act, 2014. This bill which amends excise tax on telecommunications services in Uganda (among other items such as alcoholic beverages and sugar confectionaries) including mobile money transactions and transfers (but not imposed on bank transfers), "over the top" internet usage such as Internet messaging applications as WhatsApp Viber and Skype which are in use in Uganda.
The application of the excise duties applies to "over the top" telecommunications services:
"over the top services" means the transmission or receipt of voice messages over the internet protocol network and includes access to virtual private networks but does not include education or research sites prescribed by the Minister by notice in the Gazette.
The amendment to item 13 entitled "Telecommunications services" includes:
- 12% of the fee charged for airtime on mobile cellular, landlines and public pay phones.
- Ushs 200 per user per day of access for "over the top services"
- 15% of the fees charged for money transfer or withdrawal services, including transfers and withdrawal services by operators licensed or permitted to provide communications or money transfers or withdrawals but not including transfers and withdrawal services provided by banks.
- 20% of value added services
- 1% of the value of the transaction pertaining to mobile money transactions on receiving, payments and withdrawals
- USD 0.09 per minute for incoming international calls, except calls from the Republic of Kenya, the Republic of Rwanda and the Republic of South Sudan
The rationale provided by the committee was that:
"OTT services do not attract excise duty, unlike voice calls that attract VAT and excise duty. This is unfair and inequitable for consumers who buy airtime and use it to make voice calls compared to those who buy internet data and make VoIP calts. This is also intended to clarify who is liable to account for excise duty over the top services.... mobile money is an efficiency gain and should be taxed. Money migrated from the traditional payment systems like banks to the digital platforms. It is therefore important that taxes be levied on such platforms. Using mobile money is a choice as there are other methods of payment which are already attracting taxes. This proposed tax will generate more revenue and broaden the tax base." (Report of the Committee on Planning, Finance and Economic Development on the Excise Duty (Amendment) Bill, 2018)