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.

UCC: Suspension of all Sim Registration with the Use of Refugee Cards and Attestation Letters from OPM (07.10.2019)

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.

Look:

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.

Uganda: Press Statement – Justification of procurement of OTT services for Members of Parliament (16.05.2019)

Total Disconnect: A New Sim-Card Registration Drive by the UCC!

“Those who don’t know history are doomed to repeat it.” – Edmund Burke

The Uganda Communication Commission (UCC) must be a idle force of civil servants, a big bunch of lazy people who has very little to do or even trying to make up work. Because yesterday, a breaking news, which shouldn’t be breaking news is happening again.

The UCC and the Telecom Companies have had several of drives and issues with their SIM-Cards over the last few years. As the companies was even suspended from trading SIM-Cards for a while. That is what has happen. However, it is no returning. The UCC and National Resistance Movement (NRM) likes to toy around with the public and the Telecoms as they are fountains of funds, apparently.

In this spectrum, lets build a timeline before yesterday. The first deadline for registration of SIM-Cards was on 21^st April 2017. Second deadline was on the 19^th May 2017, but that wasn’t enough either. Because of that, it was postponed to the 22^nd May 2017. Alas, that was not the finalization. The registration run continued until 30^th August 2017. This was the final one of that SIM-Card Registration drive. 

The issues in the last go around was between National Identification and Registration Authority (NIRA) with the National ID Number (NIN) activation on the SIM-Cards, as well as the technical difficulties with the UCC and the Telecoms. Therefore, as the OTT Tax is in play, the state should know, whose is who and know who pays the tax or not. The SIM-Cards should be registered in some sort of system already.

That was the issue of 2017. Now the UCC is revising this and reissuing the same sort of activity. For whatever reason they have. As they now did on the 29^th March 2019. Why it is weird, is that the Telecoms had new guidelines selling the SIM-Cards from beginning of August 2017. Therefore, the need shouldn’t be there?

However, this is the latest: “The Uganda Communications Commission (UCC) has directed all telecom companies to verify the identity of their subscribers who hold multiple phone SIM cards” (91.2 Crooze FM, 29.03.2019).

Didn’t the new guidelines of August 2017 set the status clear of the ownership of the SIM-Cards, even if they have dozens of phones. The new guidelines from two years ago should have been proper and established the ownership. Especially, since all the SIM-Cards needs the NIN have to be registered now. Alas, that is apparently not the case.

How, bad can you do a job? Or how lazy are you, since you have to repeat it again? After reviewing and revising it, two years ago and tanking the Telecom Industry, because in the last go-around the state blocked the sale of the SIM-Cards. Therefore, expect something similar in this circus too. Expect it going back and fourth. Suddenly, the President will come with an final order combined with the Minister of ICT Frank Tumwebaze.

That is just how these things goes. The State House has to have a finale say, before the stamp of approval. Than, this saga might be close to end, before it returns to years later with a new modification. Peace.

The 200 Shillings of Doom: Tumwebaze mixed messages concerning the Social Media Tax!

We knew that the statements of 2018, as the loyal ICT Minister Frank Tumwebaze hadn’t done his due diligence, as the Ministry of Finance, Planning and Economic Development (MoPED) issued a Social Media Tax last year after President Yoweri Kaguta Museveni wrote a letter to the Ministry of Finance asking for the opportunity to tax this.

That has no been done over the last few months, but as the realization of the effects are coming. The forewarning of CSBAG and others wasn’t listen to. I wrote that it lacked due diligence of the tax in June 2018 and today. As I open Daily Monitor and seeing that Frankie Boy has changed his ways. He has opened his eyes and seeing what some of us saw all along. As the cost of content, the cost of using social media and that this has ensured that it is less viable. Since, its the elites who can use it, but the lower level civil servants cannot afford to be online. That was natural, that the 200 shillings per day would be taken directly of the plate and also evaporate funds for investment within the Republic. It is a negative tax, and therefore, naturally have reverse effect, than what the state promised when they levied it.

Tumwebaze statement in July 2018:

“When Ministry of Finance is borrowing, we, the Parliament and civil society are grilling them for borrowing. But when we say this is a sector that has grown in the economy so let’s get a bit of it, let’s get Shs. 6,000 from every holder of a smartphone consuming OTTs, what production capacity will it stifle?” (…) “Is USD 1,4 too much for a citizen to contribute to tax yet you have money to buy a smartphone, minimumly at Shs. 300,000 that is data enabled, and you load bundles of over shs. 30,000? Logically it doesn’t make sense” (Frank Tumwebaze, 17.07.2018).

Tumwebaze statemetn in January 2019:

“The committee chaired by Annet Nyakecho said Over The Top tax seems to negatively affect the consumption of ICT services and products. In response, ICT Minister, Mr Frank Tumwebaze admitted that the tax is has had adverse effects on the sector. He said they were “hoodwinked” by their counterparts in the Finance Ministry that the introduction of the tax on the basis that it would widen the country’s revenue base” (Ssebuliba, 2019).

ICT Minister Tumwebaze was so positive and thinking this was the future. This was how to widen the tax-base, but instead. It has as expected made the usage of Social Media expensive. Which means also there is lack of funds for the ones operating within the Social Media and making Online Businesses. This is both happening because of the hard hitting taxes on Social Media, but also the Mobile Money Tax. Both taxes has both the Mobile Money Industry and the ICT development, as they are both having less activity and less usage. Which is natural, when the costs are going up.

The ICT Minister should have known this before speaking so warm about it. Any tax are taking money out of the system. The 200 shillings of doom is clear. The state could have listen to the advice, but didn’t open the ears to it.

In June 30 2018, Daily Monitor reported this: “Civil society organisations have accused the government of trying to stifle debate online with this tax, while others like the Civil society Budget Advocacy group CSBAG, say the tax will have a negative impact on a business.” (Hinamundi, 2018).

So, if the ICT Minister Tumwebaze could have known and stopped this. They could have done the right thing and not continued this path. Instead they have hurt the industry, because they are all blindly following the orders of the President. That is what the state did and they levied the 200 shillings of doom, as it was anticipated by anyone else. Than, the authorities itself. Peace.

Reference:

Samuel Ssebuliba – ‘Parliament orders assessment on impact of social media tax’ 18.01.2019, link: https://www.monitor.co.ug/News/National/Parliament-orders-assessment-impact-social-media-tax/688334-4940312-rph8g3z/index.html

Collins Hinamundi – ‘How government will collect the new social media tax’ 30.07.2018, link: https://www.monitor.co.ug/News/National/How-government-will-collect-new-social-media-tax/688334-4639596-juy8n3z/index.html

Opinion: President Museveni wants more telephone surveillance and praise his OTT Tax!

I wonder if Yoweri Kaguta Museveni ever listens to himself and his own advice. Because his own words so often are compelling to his own activity. Just like yesterday, he continues his rants of wisdom. This is something from the 32 years regime, who continues to pursuit their own game. It is nothing, that seems to stop them in their ways. They are just collecting whatever they can, even when there is no proof of doing any good by doing it. They are pushing taxes on the public, without giving service delivery back. They are just taxing them and making life harder. 

President Museveni also spoke on surveillance of the Telecommunication Industry and use of Cellphone. Because he believes that the Companies are not paying their fair share. He is really proving his dictating ways and his micro-managing to the next level. He has the answers for more taxation and the answers to solve the lack of funds for the state reserves. Take a look!

“The third measure is electronic monitoring of telephone calls because the telecoms have been under-declaring their revenues. URA was depending on figures provided by the companies instead of independently monitoring them” (Museveni, 23.11.2018).

“Fourth, we must electronically monitor all money transfers. URA and BoU should do this. We recently started a tax on mobile money and social media. The mobile money tax was good because we had a large portion of people who are in non-monetary GDP.” (Museveni, 23.11.2018).

What is more worrying is that he wants to practically surveillance of the telecom industry. He wants to follow the airtime and cellphones, to check if the Telecommunication Companies are underwriting and lying on the usage of the telephone-services. This is furthering the opportunity of the state to follow and monitor the public, they will have the excuse to do so, by checking if the Airtel, MTN or other companies are telling the truth.

The last piece is that the President says the Mobile Money tax was positive, because it shown the amount of people who living in a non-monetary society. That the Mobile Money Tax are showing to what extent the public are living without bank-accounts and by direct cash services. That is why the Mobile Money has been important all over Uganda, because it has given people ability to pay over another platform, which wasn’t costly, but opening to transfer from instance family members in Kampala to the ones up-country.

Therefore, the Mobile Money tax has made it more costly and more of a bother. This hasn’t made it better, but made life harder. However, the President doesn’t see the good for the people, but the good for his spending in the State House. Which has grown by adding more taxes and not checking the consequences of doing so. Peace.

Public Notice from Telecommunication Companies on the Mobile Money Tax (17.11.2018)

MTN implements reduced Mobile Money Tax (17.11.2018)

Opinion: OTT and Social Media Tax is failing as anticipated!

The Over The Top Services Tax and Social Media Tax can only be said as utter embarrassment by the National Resistance Movement (NRM). There are enough things to know this would happen, as the plan was for getting the revenue, but not thinking the consequences of the taxes. That is why, today’s revelations about the levied taxes isn’t that surprising.

Without due-diligence, it is hard to know the effects and the means for why it is put. It seems like the President and the NRM had a dream of cash-flowing into the Consolidation Fund without any consequences, but apparently it does. And when you add taxes on things, people either use less or plan more effortlessly to circumvent this added cost on their daily lives.

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).

While it is a few days ago, that the MTN Uganda promised the 24 hours since paying tax, that the tax would last from the time of payment of the tax until the time is spent. Instead of how it has been, until the new day coming. Meaning, that often you would only get half-a-day with the Social Media, as the taxation would start again, when the clock turns 00:01.

That is why this was news to: “Airtel Uganda and other telecom service providers have announced a fundamental change in the Over the Top excise duty imposed on social media following a directive from Uganda Communications Commission, the telecommunications regulatory body in Uganda. Since its introduction in July 2018, the tax commonly known as OTT or social media tax, was only valid up to midnight of the payment date for daily users. With the recent changes, daily subscribers can now enjoy internet services for a complete 24 hours – right up to the time that they subscribed 24 hours earlier. This also applies to the weekly and monthly users who can also enjoy services until the time that they subscribed” Brian Emorut – ‘Social Media tax validity to now last 24 hours’ 06.11.2018 – Guide 2 Uganda).

So now, Airtel and MTN has changed their pattern of getting the OTT tax. While URA is struggling to met the supposed the quota. This shows that the state had not considered all implications to the levied taxes. The NRM clearly didn’t envision, either the use of VPN and also that people cannot afford it. Because it is barrier to be even using the social media after the taxes.

Surely, the 24 hours usage and the lack of collection. That the Telecoms and the Mobile Money outlets has been pushed and lost revenue is certain. As the data-bundles and Air-Time had to be corrected from July on and also now the barrier for OTTs are changing again. This is surely showing that the Telecoms and the Republic wasn’t prepared for this, but doing it on orders from the President. Peace.