Uganda to Tax Money Transfers

June 17, 2013 Taxation in Uganda

Mobile Money TransferKAMPALA – Nearly 9 million Ugandan taxpayers are about to be hit in the pocket, as the government sets forward to tax a mobile money transfer service widely utilized in the country.

Late last week the government of Uganda announced that a 10 percent tax will be charged on all mobile money transfers completed through national financial institutions, and while the measure was initially overlooked by the public, controversy arose over the weekend as claims were made that the measure will have a disproportionately detrimental effect on the financial situation of the country’s lowest earning taxpayers.

Mobile money is a widespread and popular service in Uganda, allowing individuals and business owners to deposit, withdraw, and transfer money to an account which is directly linked to their mobile phone number.

It is currently estimated that as many as 8.9 million taxpayers in Uganda, or approximately a quarter of the total population, currently use mobile transfers services on a regular basis.

The government forecasts that the planned tax will raise as much as UGX 12 million per year.

According to taxation experts, the new tax is essentially a direct levy on people’s money, due to the fact that many Ugandans have opted to use mobile money services as their primary means of cash handling instead of traditional bank accounts, with a significant number of population now choosing to have at least a portion of their wages transferred directly to their mobile accounts, and use it to pay their regular bills via mobile money transfer.

Photo by mlaaker