BOGUS TAX? OTT Bids Farewell After 3 Years

Starting Thursday 1st July, 2021, Ugandans will start accessing Internet services and all other social media sites without paying the Over The Top (OTT) tax or using encrypted connections such as Virtual Private Networks (VPNs) in a new taxation module passed by the Parliament of Uganda.

Consequently, the government has abolished the Shs 200 per day OTT tax and instead imposed a 12% tax on Internet data in the new financial year, which starts tomorrow (Thursday 1st July).

The OTT tax was abolished by the 11th Parliament in the Excise Duty (Amendment) Act, 2021, and replaced with excise duty on Internet data.

“The excise duty is tailored towards enabling the country attain industrialization for inclusive growth, employment and wealth creation.” State Minister for Finance i/c of Planning Amos Lugoloobi, said while presenting Financial Year 2021/22 budget on June 14.

OTT tax was first introduced in 2018. But following public uproar, including protests led by most notably the then Kyadondo East MP Robert Kyagulanyi alias Bobi Wine, the government proposed to drop the tax, saying Uganda Revenue Authority (URA) failed to hit the tax collection target from OTT.

URA failed to meet their tax targets when Ugandans instead resorted to VPNs to bypass the government tax.  URA in July 2019 said they had collected only Shs 49.5 billion out of the targeted Shs 284 billion from OTT for Financial Year 2018/2019, a shortfall of 83 per cent.

Eng. Dr. Francis Tusubira, an Engineering and Technology expert was last year (2020) hosted at an ICT Webinar by the Centre for Advanced Strategic Leadership (CASTLE) and among his many points that day was the issue of priority in government. He argued that the world had transformed and learners needed to be introduced to the internet as early as possible because that is their world now.

“There is this continuing fight (in our country) against technology as if it is an enemy. The biggest challenge is awareness [to the leaders and policy makers] that technology is beneficial” Eng. Tusu, as he is fondly referred to, said at the Webinar.

Eng. Tusu likened the OTT tax that government levies on internet users as taxing the grass which the cows feed on instead of waiting to tax the milk that comes from the cow.

Allan Ssenyonga, a writer and an ardent user of the Social Media space, has had no nice words for the OTT tax ever since its introduction. According to him, OTT was just a bogus tax because it was levied on the basis of access and had no regard of whether one is making money online or not.

In an interview with The Ugandan Wire last year, Mr. Ssenyonga was disturbed that citizens that are not able to afford to pay OTT were being denied access to information in an era that has been dubbed the Information Age.

Access to information is a fundamental human right recognized by the Universal Declaration of Human Right (UDHR) in Art. 19.