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To the chagrin of everyone, the Ugandan government has implemented taxes on social media and mobile money, surely one of the most regressive measures taken by an African government in the world. Technological area to date.
Services such as Facebook and Twitter now have to pay a daily fee for this privilege, while Uganda has also imposed a 10 percent tax on cash transfers made by mobile phones and other operators. money transfer. International remittances are also affected.
How harmful can this be in general, and to the growing technological ecosystem of Uganda? Although not being one of the continent's leaders, the East African country is well stocked with innovative startups and is receiving its fair share of funding, but all of this can now be in trouble then that the government is trying to take its share.
Co-Founder of E-Commerce Startup Qwicart stated that in general the new laws were not economically sound, and took Uganda on a "path of economic gloom ".
"To overwhelm the poor through many taxes has never led to economic development," he said.
This was a point of view shared by Chrispinus Onyancha, CEO of the Ugandan e-health start-up clinicPesa who said he understood that the government was trying to expand the business. tax base but felt that taxes had been implemented without consideration for the people at the bottom of the pyramid.
"If the citizen pays taxes to move and draw his money, then he may prefer the traditional method of physical distribution of money, which greatly kills the financial inclusion and innovations in the financial sector that would improve the quality of life of the person Stone Atwine, CEO of the money transfer start-ups Eversend and Remit chose to focus on the tax on social media in particular, saying it was "very irregular" because it was basically censorship and an attack against net neutrality.
"They call it a tax on OTT, which is a concoction of mobile network operators who have always wanted to add a fee to voice and video services. Now the government is opening the floodgates by being the first to tax parts of the Internet, "he said.
Bad news in general, then, but also bad news for the space of Uganda's startup Onyancha said that the majority of companies in the technological space will be forced to increase their fees to reflect taxes.
"Those who will not die", a- he said.
Mugisha said the fintech space in particular is going to take a huge hit because it has been anchored by mobile money.
"Many technology platforms have built features around the mobile money. The additional taxes will result in a reduction in the use of these payment options, "he said.
Meanwhile, Mugisha said the tax on social media would make the acquisition of Customers more complex for startups.Twitter Twitter will surely dive in. Atwine agreed, saying that most startups in the technology space depend on these social media and communication platforms to run their businesses.
"Our business relies heavily on Facebook ads for user acquisition, and we pay handsomely for access to users. These users will now be fewer and this will reduce our reach and growth, "he said.
Mugisha believes that all of these issues could lead to a form of" startup theft "from Uganda. Better markets like Kenya or Rwanda, where governments support growth by investing in technology, "
" Innovations will continue to innovate – ways that minimize the need for channels such as mobile money. see a big vacuum created for solutions such as cryptocurrencies and mobile wallets, and the need to collaborate more with banks than with telecoms, "said Mugisha
That said, the consensus seems to be that these new regressive laws will not last.
"Draconian laws tend to have a short shelf life. The impact that these laws will have on the country will surely lead to a revision, "said Mugisha.
Onyancha shares this view on the mobile money tax, which he says will be removed, but only after causing a lot of damage.
"As for the social media taxes, they will stay but probably implemented within the data bundles. So, every time you buy some packages, some of the money pays taxes, "he said.
Atwine also does not expect laws to stay in place too much long time, but seems cautious.the logic has escaped the officials – the fiscal body and the regulator.Of course, citizens will continue to protest, but they will eventually stop.It is a very tax The government is saying that it has to provide money to expand the services, and the logic of cutting services to provide more money. Access is confusing, "he said.
Fortunately, there are signs of logic coming back. Prime Minister Ruhakana Rugunda said the government is looking at taxes after a brutal reaction.
"The government is now reviewing taxes, taking into account public concerns and its implications for the budget," he said in a statement.
"The Chair provided advice on this issue and encouraged further discussions with a view to reaching a consensus on how we should raise the revenue needed to finance our budget."
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