04 May 2021

The Ugandan government has imposed a 12% excise duty on internet data under the Excise Duty Bill 2021.

The new tax officially comes into effect on July 1 and through this charge, which is part of a series of fiscal measures including the introduction of a US$0.028 per litre fuel tax, the government said it wants to raise revenue that will help pay off the public debt.

As of December 2020, Uganda's total public debt had reached a record high of US$18.4 billion, up from the 49 trillion shillings as of December 2019. The data tax follows the failure of the tax on over-the-top (OTT) apps - WhatsApp, Twitter, etc. - introduced in 2018. In the second quarter of 2020, when the mobile internet subscriber base was 18.9 million, the Communications Commission (UCC) estimated that only 11.3 million subscribers were paying the OTT tax. The rest of the users opted for virtual private networks (VPNs) to stay out of sight of the government.

With a 12% excise tax on any Internet bundle purchased, access to connectivity is looking more expensive for Ugandan consumers. They have criticized the decision, saying it is a drag on the economy at a time when the Covid-19 pandemic has made online services even more essential. According to Cable.co.uk's "Worldwide mobile data pricing 2021: The cost of 1GB of mobile data in 230 countries" report, Uganda is the 19th most expensive country in Africa in terms of average cost per Gigabyte. The price in the country is $1.56