National News

Social media tax biting Ugandans

The new month has started off with a rude awakening for many in Uganda who got to know that the OTT Tax was real after all when their favorite social media sites like Facebook, Twitter and Instagram among others were switched off a few minutes to midnight. The services only resumed for a few of those who were able to pay using Mobile money, the only option available for paying the social media tax.

Ugandans turn to VPNs

As predicted by ICT experts, Ugandans have found virtual private networks (VPN) the ‘ultimate solution’ to bypass paying the Shs 200 daily excise duty charge on Over-The-Top (OTT) services.

The tax, christened ‘social media tax’ affects social media platforms such as Facebook, WhatsApp, LinkedIn, Instagram, Viber, Skype among others.

While government expects to collect about Shs 400 billion annually from the social media users, realisation of this target may be hard going by the efforts Ugandans are taking to avoid paying the tax.

For example, the search for ‘VPN’ on the world’s most popular search engine, Google, has skyrocketed and hit the maximum value (100) in the past few hours when the tax came into effect.

‘VPN’ search hit the maximum value (100) on July 1 at 1am – just an hour after the Internet Service Providers (ISPs) switched off the social media platforms. VPN masks the user’s exact location and circumvents the blockage.

ISPs – mostly telecommunications companies (MTN, Airtel and Africell) announced in a joint statement that the effective July 1, 2018 internet users would have to pay Shs 200/daily, Shs 1400 a week or Shs 6,000 a month in order to access social media platforms.

Indeed, popular platforms such as Twitter, Facebook, Instagram were switched off by the telecoms on July 1 at midnight. Some subscribers even accused MTN of ‘switching off all internet’ for those who who had not paid the tax. MbararaCityNews couldn’t independently verify this accusation. The tax can be paid using MTN Mobile Money by dialling *165*2*8#, Airtel Money by dialling *185*2*5# or Africell Money using *144*2*#5. Africell customers can also pay for the tax using Airtel and MTN Money.

This is the third time in recent times Ugandans have run in droves to VPN to circumvent internet blockade. The first time was in February 2016, when telecommunications regulator, Uganda Communications Commission (UCC) directed ISPs to shut down social media platforms – mainly Facebook and Twitter ahead of the general elections.

Government said then that the shutdown was necessitated because Ugandans had taken to social media to incite violence and also discredit President Yoweri Museveni as candidate who was seeking and won a controversial fifth term marred with irregularities including voter bribery, election rigging.

Another social media shutdown was ordered in May 2016 ahead of Museveni’s swearing in ceremony at Kololo Ceremonial Grounds. Government accused the opposition politicians, most of whom were under house arrest of using social media to mobilise their supporters to disrupt the swearing in ceremony of President Museveni.

In 2016, Trust.Zone VPN was downloaded at least 520,000 times by mobile and desktop devices in Uganda within just two days – overwhelming the site and making it unreachable for about 30 minutes. A report by Internet World Statistics (IWS) indicated that 1.5 million internet users from Uganda in just three days had downloaded and were using VPN after the February 2016 blockade.

SOCIAL MEDIA BOYCOTT

Some activists have taken to social media using the hashtag #NDataWeek to rally on Ugandans who have more than one sim-card to drop at least one of them so the telecoms they accuse of failing to fight for them, can also lose some revenue. With VPN usage, the telecoms still earn from data bundle purchases.

“Exactly my point, I personally have no objection to paying tax but I grow goose bumps when individuals swindle hefty amounts and they get away with it” photographer Nicholas Bamulanzeki wrote on Twitter.

ILL CONCEIVED TAX?

A government official who did not want to be quoted said the social media and mobile money tax “was ill conceived, ill advised and will therefore only be paid by a few ignorant individuals.”

According to the official, cabinet and parliament ignored technical advice on taxation of social media because, not only would it be hard to collect the taxes, but it would also cripple innovation of young Ugandans as internet prices which were becoming cheaper will rise again.

The tax is as ill-conceived as the time government blocked unregistered sim-cards after the murder of police spokesperson Andrew Felix Kaweesi in March last year. Asked how government was going to lose revenue, he said many Ugandans will just switch to VPN.

“The ones who are capable and rich enough to pay the tax are going to switch to VPN. The poor ones who used to buy bundles of Shs 500 and Shs 200 will just go offline. I just don’t see how government will gain on this one. Government lost 20-30% in revenue when they switched off the unregistered mobile sim-cards. We expect the same loss percentages with the mobile money tax,” he said.

Effective July 1, every mobile money transaction will draw 1 per cent of the amount either received, deposited, paid or withdrawn on top of the normal transaction fees and charges. Previously mobile money deposits were free.

Museveni recently said taxing use of social media would not only generate for government revenue of Shs 400 billion annually, but it will also help stop social media users from spending most of their time ‘rumourmongering’ and become more productive.

The death of WhatsApp group

Most WhatsApp group we sampled are empty, some with very few members online a sign that Social Media Tax is biting Ugandans hard.

#SocialMediaTax

This Twitter Hashtag is trending with over 5000 views and posts per second. We sample some of the conversations and what Social Media activists are saying

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