This archive report was first published on 28 November 2019.
On March 1, 2018, Uganda introduced a one percent tax on the transaction value of payments, transfers, and withdrawals, increasing mobile money fees from 10 percent to 15 percent. The country also introduced a new levy on more than 60 online platforms, including Facebook, WhatsApp, and Twitter, amounting to 200 Ugandan shillings (USD 0.05) per day.
According to a study released by Mozilla and the African Union Commission (AUC), the impact of these new taxes was immediate. The number of internet users in Uganda dropped by nearly 30 percent between March and September 2018.
"We've seen new taxable internet users during the last two years leave millions of people struggling to deal with the costs of getting and staying online," said Alice Munyua, the Policy Advisor for Mozilla in Africa.
The study, which examined the misconceptions, challenges, and real-life impact of additional taxes on over-the-top services (OTTs) imposed by governments across Africa, revealed that the taxes had a significant impact on the economy. The country had forgone 2.8 percent in economic growth and Ugandan shillings 400 billion in taxes.
"These regressive regulatory measures are taking place as governments rush to introduce digital transformation initiatives, and instead of focusing on how to connect more people to the internet, the region is building barriers that keep them off it," Ms. Munyua added.
