BOU makes U-turn on mobile money tax
A month after it warned that the mobile money tax would hurt the economy, a twist of events, Bank of Uganda has defended the tax.
In August, officials from the Central bank appeared before Parliament’s Finance Committee that is scrutinising a bill to amend the Excise Duty Act 2018 that introduced the tax and warned while the tax would increase revenue, it is inefficient, uncertain and complex.
Bank of Uganda director of statistics Charles Abuka told the MPs that the mobile money levy goes against tax policy considerations that have traditionally guided the development of the taxation system.
But the Governor, Emmanuel Tumusiime Mutebile contradicted that position when he appeared before the same committee with the State Minister for Planning David Bahati on Tuesday.
Bahati said, Bank of Uganda and the Ministry of Finance, Planning and Economic Development had harmonised their positions on the matter and agreed to have the 0.5% tax on Mobile Money withdraws maintained.
“Following the meeting we had with the Governor, the staff with the Bank who interfaced with the Committee and this is the final position of government meaning all agencies that as government, we are still standing by the tax measure the reduction of measure from 1% to 0.5% we think it will be a good step in the right direction,” Bahati said.
Under the amendment bill, government seeks to reduce the tax on all mobile money transactions from the earlier 1% to 0.5% levied on withdraws.
Government projects to collect Shs118bn from the mobile money tax.
Out of the opposition that the tax received at its introduction on July 1, the Central Bank recorded a fall in volumes of transactions to a tune of Shs 672bn in the first two weeks of July 2018.