OTT Tax is not political and has nothing to do with freedoms of speech,” Godfrey Mutabazi speaking on concerns around the taxing of social media.
In a discussion with the BBC East Africa Bureau on concerns around the Taxing of Social Media.
Godfrey Mutabazi, the Executive Director of the Uganda Communications Commission said that one of their major concerns was on the figures reported by the Uganda Communications Commission of internet users that appear to be very high in spite of the introduction of the OTT Tax as it has come to be known.
According to him, the figures used in the reports published by the Commission are aggregated quarterly from the data reported by licensed Mobile Network Operators of active internet Subscriptions. These operators have a license requirement to make monthly operational reporting to the Commission.
However, he stressed that these figures which include all internet access subscriptions both for mobile internet subscribers and fixed internet subscribers consist of both social media access and access to other areas of the world wide web.
“It is important to remember here that the OTT Tax is only on the Over The Top services and not the internet in general. Therefore, the levy, having not been applied to every aspect of internet access, allowed for subscribers to continue using the internet generally even without paying the Social Media Tax,” Mutabaazi said.
From the operator monthly reports collaborated by the URA collections, there was a reported decline of users of social media services in the quarter of July – September 2018 immediately following the implementation of the Social Media Tax.
However, Godfrey Mutabazi explained that this decrease was of users who were previously active Social Media users, but following the implementation of the tax, they were not reported to have paid the daily, weekly or monthly tax to access Social Media.
In addition, there have also been alternative means by which subscribers access Social Media primarily through VPN or shared Wi-Fi platforms.
These subscribers would ordinarily be reported under the total internet users which therefore remained high but not published under the social media subscription figures due to them being able to bypass the expected route for social media access.
Furthermore, Mutabazi stressed that what Ugandans should know is that the telecommunications sector is a significant tax contributor to the economy, and these taxes are charged at varying levels based on the type of telecommunication service offered in the market.
“As a result, traditional voice service was a significant contributor in taxes both at a local and international traffic scale but with the convergence of technology and services were voice is moving from traditional Public Switched Telephone Network (PSTN), or the traditional circuit-switched telephone network to Internet Protocol (IP) networks, the emergence of OTTs have affected government targeted tax collections with a reported decline from telecom services over the years,” said Mutabazi.
All countries in the world are struggling with the decline in the contribution by telecom operators to the government coffers based on the convergence of services however, Mutabazi stressed that this is not unique to Uganda as it’s a chance for them to move from offshore to platforms where OTT providers, like Whatsapp, Facebook and the like reside.
In addition, he said that as other countries continue to analyse, Uganda made the move to introduce the tax so as to ensure that the government can recover part of the telecom contributions that have been affected by the convergence of technology in light of the country’s inability to charge Whatsapp and Facebook directly a portion of the revenue generated from Ugandan subscribers.
“That aside, countries around the world are in discussion to establish means by which these OTT providers can be charged legally a portion of the revenue generated as a result of the use of their platforms by local citizens to recover the loss of government taxation. Therefore, the OTT Tax is undoubtedly not political and has nothing to do with freedoms of speech,” Mutabazi noted.
“I believe that Ugandans should be more concerned that the wealthiest and most productive international companies which happen to be OTT platforms, e.g. Facebook, Whatsapp, Instagram etc., have eroded Uganda’s taxation potential for communication services. This is a significant reality that is being discussed world over,” he added.
According to him, Ugandans should also remember that these organisations, do not make any contributions to the government of Uganda in the form of taxes, and yet have leveraged off their subscription numbers, which include our local citizen figures, to generate their substantial revenues.
In the absence of international treaties that support the taxing of global companies that deliver services off global IP platforms, the government surely needed to address the tax collection gap hence the reason to introduce the OTT Tax.
“Further discussions are being held locally, regionally and internationally to agree on how to address contributions to the government by these companies so as not to appear to penalise citizens in settlement of this levy.”
Meanwhile, Godfrey Mutabazi promised to discuss with the Chief Executives of the Telecom companies on issues to do with Social Media Bundles that come with the OTT Tax inbuilt without excessive price increases.
By John Dalton Kigozi