Opinion: OTT Tax on Data Bundles is like a dual-VAT

“URA Commissioner General Doris Akol told the Finance Committee of Parliament chaired by Henry Musasizi that the controversial OTT Tax will be charged directly on data instead of mobile money to curb the evasion” (NBS Television, 14.01.2020).

I wonder if Doris Akol has thought this through or is winging it? As she see the losses and lack of results, revenue or tax base with the 200 shillings of doom. The whole OTT Tax is to expensive for the public daily. Now, she wants to move it and indirectly tax it instead.

Surely, they will get revenue, but this will make it more expensive to buy data-bundles for the customers and make the packages more viable. VPN and similar networks to circumvent the usage and payments of the daily OTT Tax have beaten the Uganda Revenue Authority (URA). That is why URA does this now.

It is a sign of defiance and civil disobedience. They are trying to patch the hurt. But will this succeed? Will more try to only load data through Wi-Fi networks and wireless networks in general. Not load so much data on the go. Because, people are smart and tries to undercut extra taxes. Especially, when on the data is already paid VAT and the Mobile Company pay their taxes on the profits too.

Therefore, URA and Akol seems fishing. They will raise revenue, but also make the data bundles more expensive and with that stop plenty of people from buying bigger data bundles for surfing online on your smart-phone.

That is just the mere reality. It is a sign, yet again that the OTT is a failed project, who didn’t hit the targets and wasn’t measured right. If it was, the aim and the bargain wouldn’t be like this. That is not happening.

This method is a clever way of adding the costs of data, while charging for service not necessarily used. The OTT Services, which is the reason for why these are charged. Because, the data could be used for other things and therefore, is violating its attempt to make it costly for certain usage on online.

This is again, pushing one story, pushing one tax and trying to tax the public by any means. When the hook doesn’t work, they use the crook. Instead of doing directly, they want to do it indirectly and initially in some way adding a separate VAT on data-bundles masked as OTT Tax. That is really it.

We all know this, URA verify it today. That the only things certain in life is death and taxes. Thanks Akol for reminding us. Peace.

Brexit: A Shoddy Impact Assessment of the new Withdrawal Agreement Bill…

This was really inspired and not well thought out of, the Department of Exiting the European Union and the rest of the Tories. Really didn’t care much for the estimates of the costs, nor the consequences in concerns of their amended Bill to Parliament. Prime Minister Boris Johnson wants to just pursuit the ending without doing the proper work. This is shoddy, disrespectful work, which he wanted to be over within 3 days or so. Within the parameter of when he wanted to suspend the Parliament.

So, his acts and his vision is blurry, as the whole law and amendments of it. Is substantial and needs time to be addressed properly, that is if, the Brexit process and withdrawal of membership has consequences. Which it does, but apparently it is more important to leave, than to know why your leaving.

I have today looked through the Impact Assessment Report on the bill, which in itself is a sad report. A disgraceful attempt of justification and proving the possible outcomes of the withdrawal. Apparently, that didn’t matter, because my quotes are very striking. Take a look!

“There could be costs to business associated with the arrangements in the Northern Ireland/Ireland Protocol. But these are inherently uncertain in their nature and intensity, as such, these costs have not been quantified” (Impact Assessment, 2019).

Customs:

“Businesses in Great Britain and Northern Ireland may face familiarisation costs in adapting to the new customs processes, such as the requirements for customs declarations, in particular if they have not undertaken such processes before” (Impact Assessment, 2019).

This isn’t rocket science and will cost both the state and the businesses. It will cost both time and money, to fill forms and secure the movement accordingly to the regulations on both sides of the customs.

VAT:

“Northern Ireland will be required to align with certain EU VAT and excise rules. VAT collected in Northern Ireland will be retained by the UK. Specific practical arrangements will be the subject of discussions within the Joint Committee, and it is not therefore possible to assess costs or benefits at this stage” (Impact Assessment, 2019).

The taxation on goods will be an issue and how its issued. This will add prices possibly on the consumer and also on the businesses. But the HM Government don’t know to what extent and how to operate. That is clearly a smooth transition.

Tariffs:

“No tariffs will be paid on goods moving from Great Britain to Northern Ireland unless they are deemed to be at risk of entering the EU. The appropriate UK tariff will be paid on goods moving from outside the UK or EU to Northern Ireland unless they are deemed to be at risk of entering the EU. The Joint Committee will agree the criteria to be used in determining whether goods are not considered to be at risk of entering the EU” (Impact Assessment, 2019).

So, there will certain cost of moving goods into the EU as per the tariffs stipulated by the Joint Committee. This means, the UK-EU on accord will find the fitted prices on movement of goods form the UK into EU. That means, the goods moving across the borders will cost more, than today, as there is no-tariff on lots of products crossing the borders at this very moment.

Agri-Foods from GB to NI:

“Agri-food goods moving from Great Britain into Northern Ireland would need to be notified to the relevant authorities before entering Northern Ireland and would be subject to checks including identity, documentary and physical checks by UK authorities as required by the relevant EU rules. These processes would introduce additional costs, both from one-offfamiliarisation and ongoing compliance, to businesses compared to current arrangements” (Impact Assessment, 2019).

This will surely cost and make it more time consuming. Not making it easy or smooth either. Surely, all of this is hardening the trade of this to NI.

Manufactured goods from GB to NI:

“To ensure regulatory compliance, businesses in Great Britain selling to Northern Ireland may incur additional costs from product testing and corresponding administrative processes. The nature of the costs will depend on the product-specific requirements in EU law and on a business’s current approach to meeting these requirements. These costs may be passed through to businesses in Northern Ireland” (Impact Assessment, 2019).

Here the costs will be put on the consumer in Northern Ireland for the goods coming from Great Britain. The manufactured goods will not be cheaper, but more time consuming to get and has to follow other protocols, than the ones coming from Ireland/EU. This means for the NI it will be more profitable to get EU goods, than GB goods, because of the cost. That is simple calculation.

We can all see, that the Withdrawal Agreement and new legal text makes business, movement of goods and borders to the Northern Ireland more harder. That without swimming into the legal text nor the statutes of the Withdrawal Agreement. Because, this is just the mere chip-shape of the impact assessment of it all.

The whole thing is lazy and that makes me grim. Because, this shows the people releasing it. Didn’t do their job and show the real estimates nor the possible costs of doing business. Only that it might cost more, which it most likely will do, because you have more things to do before doing business. Peace.

Reference:

European Union (Withdrawal Agreement) Bill – Impact Assessment, 21.10.2019

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Zimbabwe: Press Release on Court Judgment on 2% Intermediated Money Transfer Tax (18.09.2019)

Tullow Oil terminate agreement with Total and CNOOC over a tax dispute in Uganda

Today, the agreement published between Tullow, Total and CNOOC made a Sale and Purchase Agreement (SPA) on Area 1 and Area 2 in the Lake Albert Basin in the Republic of Uganda. That deal was issued on the 30^th August 2016.

Now, nearly three years later. Tullow Oil has now back-tracked and said the deal didn’t go through. Surely the SPA and the Joint Venture Agreement wasn’t settled properly. If not, then the press release of Tullow wouldn’t say this:

“Tullow Oil plc (“Tullow”) announces it has been informed that its farm-down to Total and CNOOC will terminate at the end of today, 29 August 2019, following the expiry of the Sale and Purchase Agreements (SPAs)” (…) “The termination of this transaction is a result of being unable to agree all aspects of the tax treatment of the transaction with the Government of Uganda which was a condition to completing the SPAs. While Tullow’s capital gains tax position had been agreed as per the Group’s disclosure in its 2018 Full Year Results, the Ugandan Revenue Authority and the Joint Venture Partners could not agree on the availability of tax relief for the consideration to be paid by Total and CNOOC as buyers” (…) “Tullow will now initiate a new sales process to reduce its 33.33% Operated stake in the Lake Albert project which has over 1.5 billion barrels of discovered recoverable resources and is expected to produce over 230,000 bopd at peak production” (Tullow Oil plc – ‘Termination of farm-down agreement with Total and CNOOC in Uganda’ 29.08.2019).

This deal fell through because the companies didn’t want to compensate each other for back-taxes or the taxation of the possible profits to the Government of Uganda. Something that was approved upon the Joint Venture Agreement in August 2016 with Total and CNOOC.

This shows how hard it is start-up and the issues by operating in Uganda. Even Tullow Oil plc is trying to figure this one out. It was only in January 2017, when the Total was supposed to buy the biggest part of operated stake of 21,5% from Tullow. Surely, with the announcement in 2018 and now in 2019. This has all backfired and stopped, because URA and the companies couldn’t agree on their fees.

That dispute is the one that was interconnected with the “Presidential Handshake” of 2017. As the 6 billions shillings was doled around to civil servants and high ranking officials, who secure the capital tax gain from Heritage/Tullow Oil, which was awarded in February 2015.

Therefore, Tullow has to now find new buyers for their USD $167m stake in the Lake Albert Basin. This would be the payment of the Capital Gain Taxes (Awarded $157 Million) to the Uganda Revenue Authority. Apparently, Total and CNOOC didn’t want to do that apparently.

So from August 2016 to August 2019, the three companies and URA couldn’t come to an agreement on Capital Tax Gain, which Tullow owe URA after losing their case in February 2015. This shows, that the big victory of the state in this matter. Is actually making it harder to find someone who can afford or see it feasible to drill for oil in Area 1 and Area 2.

This is how it seems and the two other companies didn’t want to pay for what Tullow did before them. Peace.

Zimbabwe: Lack of trust is the key to everything…

Well, this last few days has been revealing, as the state have added more measures to try to wheel in the economy, but if it will stick boils down to one important factor. That important factor is if the public, the citizens and the stakeholders trust the government and their policies.

This is the key with relaunch of the ghost currency, the decade long missing Zimbabwe Dollar, the joining currency floated after Bond-Notes and RTGS Dollars. Which is supposed to save the economy and bring a new normal. In an economy where there are spiralling prices, lack of imports and also lack of trust in general; this is not directly strengthening that, but surely is a test.

If the Second Republic and the second regime under Zimbabwe African National Union – Patriotic Front (Zanu-PF) is to stick around, they need to fix this. They cannot have another crash, have another big blow and weakening economy. There is already plenty of issues as is, last years taxes on mobile money and transactions took out lots of funds from the economy in direct taxations; these funds have been taken by the state and never returned to the market.

With this in mind, the state is in dire need of change, to build up self-esteem and hope for a better future. However, is the launch of the Zim Dollar, the right thing to do?

Is it about right to monopolize all buying of maize to the Grain Marketing Board, where the public is not allowed to sell or transport even a set amount of maize without licence or without authorities authorizing the transport of the maize?

Will these things make the economy stronger or will they have a negative effect like the RTGS taxes of last year?

I am thinking so, because there is very little evident of good hopes on the horizon, of possible unique changes or patterns, which the state will benefit in huge quotas from this. By all means the ZANU-PF will say it is making progress, that its all good, but not long ago there was fuel shortage and other things lacking because of lack of foreign exchange. The Reserve Bank and the other authorities better be prepared and have good advice for these changes. If they want to revive the currency, they better have a gold standard, a reach and not print money like there is no tomorrow. Since, it doesn’t take much to devalue a currency and also get hyper-inflation. Especially, when the society, the financial institutions and the whole market are sceptical about the whole deal.

The Zim Dollar and the GMB might be good ideas, might be brought to the market by good means, but will only bring more pain or suffering. As the farmers, the traders and the citizens will bear the costs, as the state is figuring out new ways to control and secure funding without adding investment or collateral for these investments. Certainly we can hope for otherwise, that the Finance Minister and everyone else involve has a well functioning plan.

However, do we really think so? Do the ZANU-PF deserve this trust and the good faith? Do they? Alternatively, are they just another military junta finding new ways of scheming for funds? Because, that wouldn’t shock anyone of us. If they are making new commissions or inquiry boards to settle old sins and hire cronies. That is what they do and not really making progress.

We can lie to ourselves and say it will all get better with these measures, but are we really certain? Do they really do all good? Does the ban of foreign currency really help? When the state functions are still taking US Dollars for functions and expecting foreigners to pay in US dollars. Do the RBZ and the Ministry really configure this or are they winging it?

There was one fella, who called the Zimbabwean economy an albatross; I think he was right, I really think he was right. By all accounts, there is little luck and little positive to find. We can joke around, mock and make a fuzz. However, the dire consequences are that teachers cannot food; the civil servants cannot pay for mortgages and so on. It is a dire need for change and for trust in the economy. Nevertheless, as long as the ZANU-PF is playing along, there will be questions. Many, unanswered, which is bringing no good. Even when the measure might have been made with grandest intent. Peace.

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