July 20, 2024

OTT tax stops today, a 12% tax shifts to data

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With effect from tomorrow (Thursday), 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).

The government has abolished the Shs200 per day OTT tax and imposed a 12 per cent tax on Internet data in the new financial year, which starts tomorrow. 

Internet data is used over a mobile connection that is not (Wi-Fi) to browse the web, check emails, play a video game, download music or use online streaming sites such as YouTube.

Internet traffic is the flow of data over the entire Internet, or in certain network links of its constituent networks. Common traffic measurements are total volume, in units of multiples of the byte, or as transmission rates in bytes per certain time units. This what government is going to charge every time one buys data for Internet use.

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

State minister for Planning Amos Lugoloobi, while presenting Financial Year 2021/22 budget on June 14, said the excise duty is tailored towards enabling the country attain industrialisation for inclusive growth, employment and wealth creation.

OTT or social media tax was first introduced in 2018 and caused a nationwide uproar and protests in Kampala led by then Kyadondo East MP Robert Kyagulanyi, aka Bobi Wine. 

Following public uproar, the government proposed to drop the tax, saying Uganda Revenue Authority (URA) failed to hit the tax collection target from OTT. This was after Ugandans resorted to VPNs to bypass the government tax.  URA in July 2019 said they had collected only Shs49.5 billion out of the targeted Shs284 billion from OTT for Financial Year 2018/2019, a shortfall of 83 per cent.


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