Uganda Revenue Authority (URA) Commissioner General Doris Akol has said that over the top tax (OTT) tax is highly evaded in the country and now wants the tax applied to data bundles instead.
Akol and other URA tax experts were on Tuesday before the Parliament’s Finance Committee chaired by MP Henry Masasizi.
Akol said her agency has failed to collect the revenue targets from OTT tax since it was controversially launched in the financial year 2018/2019.
The Social Media tax requires users to pay a tax of Shs 200 per day to access OTT services. OTT services can be defined as “the transmission or receipt of voice or messages over the internet, including access to virtual private networks”.
Government in the financial year 2018/ 2019 introduced the Shs200 daily tax for use of social media platforms such as Facebook, Whatsapp, Twitter and many others, but URA said they registered a shortfall of 83 percent as only 17.4 per cent of internet subscribers were able to pay the tax.
Akol attributes the shortfall to use of Virtual Private Networks (VPN) and wireless networks in their offices and restaurants.
“The story for OTT is very very different, it was targeted at Shs 284bn but we only collected Shs 49.5 billion and it performed 17.4 percent against what was targeted. So OTT did not perform well at all. We think it was affected by use of Wi-fi in internet covered areas and as well as the continued use of VPNs to avoid paying the tax.”
Recent data released data by the Uganda Communications Commission (UCC), shows OTT tax has had a significant impact on the number of internet users in Uganda resulting in a drop of three million internet users over a three month period since it was introduced.