The Finance Committee of Parliament has thrown its weight behind a government proposal to introduce a 0.5% excise duty on the value of transactions made through agent banking for cash withdrawals.
The rationale behind this move, according to the committee, is to ensure a fair distribution of the tax burden among all taxpayers in Uganda, rather than solely targeting users of mobile money services.
Speaking on May 6, 2024, the chairperson of the finance committee, Amos Kakunda, explained the reasoning behind the proposed amendment. He emphasized that the aim is to establish equitable taxation for payment services that offer similar functionalities to mobile money, such as Chipper Cash and Wave Transfer. Currently, withdrawals from these services are not subjected to the same excise duty as mobile money transactions, primarily because the existing tax law applies the levy to telecommunication companies, which do not encompass the entities targeted by this proposal.
Kakunda further elaborated that the proposed amendment seeks to rectify this disparity in tax treatment by extending taxation to these payment services. By doing so, the goal is to enhance fairness and equity in taxation by including all major electronic wallet platforms. This broader tax application would distribute the current tax burden more evenly, thereby creating a level playing field and expanding the tax base, ultimately leading to increased government revenue.
The committee chairman stressed that this approach adheres to the principle of “same service, same rules,” ensuring consistency in taxation across similar financial services. Additionally, he highlighted the importance of this measure in encouraging the continued growth of digital financial services while simultaneously contributing to overall tax collection efforts.
Kakunda justified the initiative as promoting both financial inclusion and responsible tax collection for the benefit of all Ugandans.
