The Ministry of Finance, Planning and Economic Development has said the new 12 percent excise duty slapped on Internet will plug the revenue gap created by those using Virtual Private Networks (VPN).

In the next financial year, government will scrap Over the Top Tax (OTT) charged for use of social media, and instead introduce the new taxes on Internet data.

The Director of Economic Affairs at the Ministry of Finance, Planning and Economic Development, Moses Kaggwa, said the new tax will also reduce on the tax administration challenges and plug the revenue gap left by the VPN users.

Kaggwa also said OTT was unfair because users like students were suffering more than others, adding that the new measure will not hurt particular groups.

He was speaking on Thursday, 17 June 2021 in Kampala during an engagement between the government and private sector players who expressed concern about the new measures and their effects on the economic activities and livelihoods of Ugandans. Former Agriculture Minister, Victoria Sekitoleko expressed concern at the rate government is changing policies, hardly giving any change for them to bear fruit and be evaluated before changing.

But she also reminded the government to first give back what it owes the private sector so that to revive economic activity. The private sector demands more than 4 trillion Shillings for supplies and services made to the government over years. Sekitoleko is also worried about the failure of the government to fight corruption.

There are growing calls on the government to improve the relationship between the tax sector and the public so that Ugandans can find paying taxes more attractive. This would also increase compliance, reduce the cost of administration and enforcement and in the end lead to higher tax revenues.

The Assistant Commissioner for domestic taxes department at Uganda Revenue Authority (URA), James Odongo said the tax body has improved its tax education drives but will continue introducing more outreach programs to reach more people.

The URA Commissioner Legal Services, Patience Tumusiime admitted that corruption persists but cited tax agents as the main culprits. She says however that measures including stricter screenings have been employed and next year, they hope the problem will be reduced.

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