Gideon Badagawa

The local private sector is worried that the new taxes on mobile money transactions as introduced in the 2018/19 budget will dampen new ICT innovations and suffocate growth of local businesses.

The private sector players under the umbrella of Private Sector Foundation Uganda (PSFU) Uganda say that the new 2 percent levy on all mobile money transactions will kill innovations that would have eased transactions.

Moses Ogwal Goli, Director Private Sector Development, while presenting private sector’s response to the budget read last week that there were over 200 new ICT innovations that might not be operationalized due to the taxes.

Ogwal said, during a private sector post budget luncheon that was held on June 18 at the UMA Conference Hall in Lugogo Kampala.

“The new mobile tax is levied on airtime, data, tax income for operators, the sender, the receiver, paying bills and all that. This is like double taxation and will in the end discourage ICT innovation,” he said, urging the government to drop what he referred to as operational taxes.

PSFU’s Executive Director, Gideon Bandagawa said that although the budget had tried to address some of the challenges facing the private sector in the country, much still remains to be done for the sector to make profits so that the government can tax.

He said that much as government was to recapitalise the Uganda Development Bank (UDB), more money was needed to be put in the bank. “The private sector needs over Shs 6trillion in the six major sectors,” he said.

The private sector players also want government to review the structure of the UDB to be able to attract more private capital, such as amending the National Social Security Fund (NSSF) Act to enable it participate in the UDB recapitalization but also strengthen micro finance centers to be able to give credit to the private sector.

They further want government to implement the national agriculture finance policy, fully implement the subsidized agriculture insurance program as a way of commercializing the agricultural sector and reduce the 68.9 percent farmers that are still engaged in subsistence farming.

Albert Beine, the Managing Director, Global Taxation Service Limited, while making a tax analysis of the budget, said that the private sector would be very important in helping taxes the Uganda Revenue Authority to achieve the Shs 16.4 trillion that it is targeted in the 2018/19 financial year.