OTT Tax: Totally failed its supposed revenue targets in 2018!
Today, the Uganda Communication Commission released their annual sector performance report of July 2019. It was really a bit funny look, as the state, the President and all of his handlers said the Over-The-Top Services would create a tax-base and revenue, which would benefit the state. That is why Uganda Revenue Authority (URA) had set up targets to streamline these new taxes.
I will show more of the fun and explain, as the UCC report really shows how malfunction and lack of due diligence hurt. But first a previous calculation, which was stated to the media. To show how much lack of tax-base the OTT had in 2018, as it was implemented in July and keeps pushing to this date.
Daily Monitor Reports: “Government collected Shs20.5b from social media in the last quarter ended September, according to data obtained from Uganda Revenue Authority. The tax, which was implemented in July, was however, less than the Shs24.9b target that URA had hoped to collect in the period. URA has a monthly target of Shs8.3b. The tax was introduced in the Excise Duty amendments of financial year 2018/19 requiring all social media users to pay Shs200 per day, before accessing certain platforms such as Facebook, Whatsapp and Twitter, among others. Government intends to collect about Shs100b before the end of the 2018/19 financial year” (Christine Kasemiire – ‘OTT raises Shs20b in first quarter, URA fails on targets’ 07.11.2018).
Let’s first do the math, accordingly, as the URA monthly target is 8,3bn shillings in revenue, every single month. A quarter of a Financial Year is 4 months. In today’s UCC report, it shows the numbers for the Q3 and Q4 of 2018. Which means, that states revenue from July-September and October-December in the previous years. By these standards its 8,3bn X3 to get the supposed of any given Q. That is 24,9bn shillings is estimated to earn per quarter.
However, the UCC report states that in the Q3, the revenue was 12,696,558,400 or 12,6bn shillings which is only about half of the anticipated revenue. The final quarter or Q4 isn’t much better:12,952,833,800 or 12,9bn shillings. Of the estimated earnings, the state is nearly able to gain about half of its target. The market and the consumers are not contributing or using the phones as much as they thought. What is striking if you combine the two quarters of revenue is that the state earned approximately 25,5bn shillings, which is sadly just above one quarter estimate of the URA in supposed revenue on this tax. The estimated earnings of the period would be about 49,8bn and this shows the state managed a deficit of about 24,3bn shillings. That is about on quarters earning not happening at all. Thats a giant shortfall of cash and the URA/UCC needs to explain the Ministry of Finance this one, because this a major loss of promised funding for the state.
This shows how failed this tax is and what a waste of enforcement and making the tax in its first place. This isn’t fun and games, but a way of misusing power to tax people, just because you find something obnoxious. That is how it seems, since the President want to stop the gossip online and such. Stop spreading of information and ensure that poorest cannot afford to get online and use the OTT services. Because, that what this tax does. Peace.