Uganda scraps social media tax introduces new data levies

In a significant move, the Ugandan government has decided to scrap the controversial social media tax while introducing a 12% excise duty on internet data usage in its annual budget for the 2021-2022 financial year. The new levy is set to affect 21 million internet users, who will now have to bear a 12% tax burden when purchasing data packages. The Minister of ICT in Uganda, Chris Baryomunsi, defended the decision, stating that taxes are necessary to raise revenue for essential services. He emphasized that the funds collected through this levy will be channeled towards improving connectivity, enhancing digital services, and bolstering education in the country. The introduction of the social media tax sparked outrage and protests in the past, leading to a decline in social media usage and digital transactions. However, Dr. Chris Baryomunsi assured the public that the new data tax is a fair and reasonable measure aimed at revenue generation for national development. He asserted that the government had learned from the backlash against the previous OTT tax and was now focused on effectively communicating the benefits of the data levy to the public. The decision to implement these taxes, including social media levies, has raised concerns about the impact on the ease of doing business in Uganda, particularly for young entrepreneurs in the digital space. Critics argue that such taxes could hamper innovation and business growth, contributing to Uganda's low rankings in global business indices. Dr. Baryomunsi defended the government's stance, stating that the taxes were the result of consultations and economic assessments. He urged young people to be patriotic and understand the importance of contributing to national development through tax compliance. Moreover, the government of Uganda has taken steps towards self-reliance in healthcare by investing in local vaccine manufacturing capacity. The National Drug Authority has recommended the establishment of a manufacturing plant for COVID-19 vaccines in the country. Uganda aims to reduce its dependence on imported vaccines by cultivating its own manufacturing capabilities. Collaborative efforts are underway to produce mRNA vaccines locally, with plans to start clinical trials and initiate production by the end of the year. As the tax landscape evolves and Uganda navigates the challenges of revenue generation and economic development, the government's decisions regarding taxation and investment priorities will continue to shape the country's growth trajectory. While the introduction of new data levies may be met with mixed reactions, the government remains steadfast in its commitment to utilizing tax revenue for the greater good of the nation and fostering self-reliance in critical sectors like healthcare.