Uganda scrapping of OTT ‘sin’ tax is short-lived celebration

This statement was originally published on on 1 July 2021.

Uganda has ditched the Over-The-Top (OTT) tax that it introduced three years ago on the use of social media services after the tax failed to raise revenues and constrained internet usage. But appearing to not have learnt any lessons, the country has instead introduced a 12% tax on internet data.

Introduced on July 1, 2018, the infamous OTT tax, widely known as the ‘social media tax’, required Ugandans to pay a daily levy of Uganda Shillings (UGX) 200 (USD 0.05) in order to access over 50 platforms including Facebook, Twitter, and WhatsApp. President Yoweri Museveni directed the introduction of the social media tax as a ‘sin tax’ to punish social media users in Uganda for the consequences of their “opinions, prejudices [and] insults” and as a means to raise government revenues.

From inception, sections of civil society and the public saw the tax as an attempt to stifle free speech and access to information – and they warned that the tax would have disastrous effects on the country’s fledgling digital economy and digital civic space. These fears were not unfounded, as Uganda is a notable digital rights predator that has ordered social media blockages and internet shutdowns, besides harassing some social media users that are critical of the government.

Predictions that the social media tax would harm internet use and fail to generate the envisaged revenues indeed came true. At the time the government filed proposals to introduce the OTT tax, the Ministry of Finance projected that up to UGX 486 billion (USD 131 million) could be collected annually by 2022. However, by the end of July 2018, the projections had been revised downwards to UGX 284 billion (USD 78 million) annually. In July 2019, one year after the introduction of the tax, the revenue body reported that it had experienced an annual shortfall of 83%, having collected only UGX 49.5 billion (USD 13.5 million). In the second year, the social media tax fetched a paltry USD 16.3 million.

Now, beginning July 1, 2021, the government has replaced the OTT tax with a direct 12% levy on the net price of internet data, after which a value added tax (VAT) of 18% will apply.

The post Uganda scrapping of OTT ‘sin’ tax is short-lived celebration appeared first on IFEX.



Human Rights Network for Journalists-Uganda (HRNJ-Uganda) is a network of human rights journalists in Uganda working towards enhancing the promotion, protection and respect of human rights through defending and building the capacities of journalists, to effectively exercise their constitutional rights and fundamental freedoms for collective campaigning through the media.

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