Telecoms Urge Parliament to Cut Mobile Money Tax, Citing Burden on Poor Ugandans

Kakonge explained that when an MTN mobile money user withdraws cash, one pays 0.5% excise duty on the withdrawn value but not the service fee. A 500,000-shilling withdrawal incurs 2,500 shillings in excise duty on the transaction value, plus 15% on the service fee.

“This creates a tax burden. Uganda taxes mobile money transactions more heavily than markets with larger digital economies and higher income. There is a need to address this challenge,” Kakonge said.

The telecoms proposed reducing the tax from 0.5% to 0.25%, with a cap of 5,000 shillings per transaction, arguing that a lower rate would stimulate usage and ultimately boost government revenue. Kakonge said projections by the operators indicate that a 0.25% tax could generate up to 80 billion shillings in mobile money revenue collections.

“The more we encourage transactions, the more mobile money users and the more revenue in the long term,” Kakonge said.

He also urged Parliament to remove import duties on entry-level smartphones, noting that high taxes have made the devices unaffordable for many Ugandans and encouraged smuggling. Kakonge said the Uganda Revenue Authority has repeatedly raised concerns about phones entering the market without paying taxes.

He added that the high cost of smartphones has limited digital participation, leaving many Ugandans unable to access online services.

Lawmakers, however, tasked MTN Uganda to improve network connectivity across the country, citing persistent gaps in service delivery, particularly in tourism areas.

“If you met the tourism operators and hoteliers, they would spend all day complaining that you enter a place like Bwindi and there is no network. When we were in campaigns, you would reach a village where you could not communicate, yet you are licensed to cover the whole country,” said Hon. Dicksons Kateshumbwa, the Sheema Municipality representative.

Otuke County MP Paul Omara expressed concern over high mobile money charges, saying they discourage usage and undermine financial inclusion. He urged operators to review transaction fees to make services more affordable.

Mbale Industrial Division MP Hon. Karim Masaba asked MTN to maintain current charges on agent banking services, noting that they remain affordable and are widely preferred over long banking queues.