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OTT tax stops today as govt launches new taxes on July 1

Government has introduced new taxes after social media tax failed (PHOTO /File)

Effective Thursday July 1, 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).

This comes after the government abolished the UGX. 200 per day OTT tax and imposed a 12 per cent tax on Internet data in the new financial year, which also starts Thursday July 1.

Since 2018, Ugandans using social media channels have been required to pay a daily tax of UGX 200 ($0.055) to use any one of more than 50 OTT mobile communication apps.

These include social media services like Facebook, Twitter, and instant messaging and voice communication apps like WhatsApp, which are hugely popular in the country.

The government said the tax was intended to raise revenues and curb online gossip.

Instead, by 2019, imposition of the tax had resulted in a decline in the number of internet users, failed revenue targets, and social unrest.

The Uganda Revenue Authority, which had set a goal of collecting UGX 284 billion ($77.8 million) from the tax was only able to collect ($13.5 million) by 2019.

Hundreds of thousands began using Virtual Private Networks (VPNs) to skirt the law. And recent analysis by the government showed that more than 8 million of the country’s 20 million internet subscribers were not paying the fees.

Now, the government has proposed a new tax which is less controversial, but experts say, it has more serious implications.

Government says there is an exclusion for data used for provision of medical and education services.

Robert Kyagulanyi, a.k.a Bobi Wine, president Yoweri Museveni’s main opposition, had been a vocal opponent of the OTT tax.

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