New telecom taxes renew debate over whether Uganda is taxing financial inclusion

What the report says

The Independent Uganda, citing URN, reports that a fresh parliamentary effort to revisit mobile money taxation has revived debate over whether Uganda’s telecom tax regime is raising the cost of digital finance and undermining financial inclusion. The discussion follows amendments to the Income Tax Act that introduced a 10% final withholding tax on commissions earned by telecom agents. Although the levy targets agents rather than customers, sector players warn that agents may recover the cost through extra charges to users.

The report places the new tax within a wider set of levies affecting telecom services. Ugandans already face a 0.5% charge on mobile money withdrawals, operator transaction fees, a 15% tax on those fees, excise duty on airtime and data, VAT on telecom services, and taxes on entry-level smartphones. Civil society groups say these combined costs make mobile money less affordable, particularly for low-income and rural users who rely on agents as their nearest financial access point.

Julius Mukunda of the Civil Society Budget Advocacy Group is cited as warning that taxing agent commissions could further weaken usage, because customers are already sensitive to withdrawal costs. The Uganda Communications Commission is also reported to have previously cautioned that high taxes suppress internet demand and slow digital transformation. Its suggested reforms include easing taxes on small withdrawals, mobile internet, low-cost data bundles and affordable smartphones.

The matter is now before Parliament after Budadiri East MP Julius Nakiyi received permission to prepare legislation reviewing mobile money taxes. The Independent reports that he argues the withdrawal levy taxes people’s own funds and conflicts with Uganda’s financial inclusion ambitions under the Tenfold Growth Strategy.