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Uganda government’s tax on social media usage sees loss of 5m users

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The Uganda government’s controversial Over the Top (OTT) Social Media tax which mandates citizens to pay a fee before they would be able to access range of social media platforms such as Facebook, Twitter, WhatsApp and many others has led to 5 million people closing their accounts.

The government had explained in May 2018 when the parliament passed the legislation that the tax was to generate revenue that will be channelled towards “coping with the consequences of online gossip”. Users were required to pay 200 shillings a day (about $0.05) to access any of the more than 60 such OTT platforms. That translated to about $1.5 a month and $19 a year.

The government expects to collect between Shs400 billion and Shs1.5 trillion annually from the social media users, but the realisation of this target may be hard going by the efforts Ugandans are taking to avoid paying the tax, hence the decline in generated revenue and internet users.

According to data released by the Uganda Communications Commission (UCC), the move has dropped the number of internet users in the country by as much as 3 million representing a 35 per cent reduction since July 2018 when the law came into full effect.

Prior to the tax law, 47.4 per cent of people in Uganda had access to the internet. The data showed that approximately half of internet users in Uganda were actually paying the Social Media tax.

“In the last three months of the quarter – July to September 2018 – under review, both the number of OTT taxpayers and the figures for the OTT revenues were in a declining trend,” a statement from the UCC noted. “The figures indicate subscribers those who have used OTT services at least once in the quarter. 50.4 per cent of the internet subscribers were enjoying OTT services by the end of September 2018.”

 

 

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