We can’t block VPNs, telecoms tell government

A month after government directed telecom companies to block access to virtual private networks (VPNs) so as to compell Ugandans to pay the Shs 200/= a day social media tax, the telecoms have expressed their inability to implement the directive.

On Wednesday, managers of MTN Uganda and Airtel appeared before Parliament’s committee on Finance, Planning and Economic where they stated that they have no control over the usage of VPNs.

Following the July 1st introduction of a tax on Over The Top (OTT) platforms, several social media users switched to VPN technology to circumvent the government’s social media tax.

Government through the executive director of the Uganda Communications Commission (UCC) issued the directive three days after the tax took effect on July 1st.

According to according to BestVPN.com, leading VPN comparison site, the number of Ugandans that turned to VPNs shot up by 1567 percent on July 1st, the day the tax was implemented.

The two telecom giants appeared before the committee to present their proposals on a government bill to amend the Excise Duty (Amendment) Act 2018 which introduced the controversial taxes.

MOBILE MONEY

The telecoms also told legislators that within the first month of the tax, they recorded huge losses.

“After four weeks, we are down in terms of revenue about 30% compared to June 2018, and we expect with the continuous downward trend. If the existing tax regime would remain unchanged, we would continue going down further beyond the 30% or 40% by the end of the year,” Wim Vanhelleputte, MTN Uganda Chief Executive Officer (CEO) told the MPs.

As the telecoms count losses, Vanhelleputte said, the biggest impact is on mobile money agents.

“The impact on agents is double because they are getting 50% of the fees and on top of that, that half they were getting, they also pay 10% withholding tax which they weren’t doing before, meaning that this group is now taxes 40% of their earnings,” he added.

The taxes causes an uproar across the country resulting into protests from mobile money agents, politicians and civil society activists.

In response, President Yoweri Museveni reduced the tax from 1% to 0.5% on withdrawals.