taxes Archives – Collaboration on International ICT Policy for East and Southern Africa (CIPESA)

By Daniel Mwesigwa |
The government of Zambia is set to introduce a daily levy of 30 Ngwee (USD 0.03) on internet voice calls. In a press statement issued after a cabinet meeting on August 12, 2018, the government spokesperson said internet calls through platforms such as Viber, WhatsApp and Skype “threaten the telecommunications industry and jobs” in licenced telecom companies such as Zamtel, Airtel and MTN”.
Accordingly, the cabinet approved the issuance of a Statutory Instrument to “facilitate the introduction of the tariff to be charged through mobile phone operators and internet providers.” In justifying the introduction of the levy, the government spokesperson cited research which showed that “80 percent of the citizens are using WhatsApp, skype, and Viber to make phone calls.”
The statement did not indicate when the statutory instrument would be introduced, or when the levy is anticipated to take effect. The new tax, according to reports quoting the communications minister, was expected to fetch USD 22 million annually.
The proposed levy adds to Zambia’s mixed record on ICT access and freedom of expression online. The Zambia Information & Communications Technology Authority (ZICTA) reports a mobile phone penetration rate of 81.9% and mobile internet penetration rate of 47.1%. However, mobile and internet proliferation is threatened by high costs of access, a digital divide between men and women and between rural and urban areas. Quality of service also remains poor as evidenced by the recent fines slapped by ZICTA on the three leading telecommunications service providers.
The Media Institute of Southern Africa (MISA) Zambia Chapter and a collective of bloggers have expressed deep concern about the tariffs on internet calls. They asked government to shelve the plans to introduce the tariff and to instead undertake efforts to promote affordable internet access. They argued that the “underlying objective” of the tariff is to “stifle free expression of millions of Zambians who increasingly depend on online tools to communicate.” They added that it is a “threat to entrepreneurship and innovation as many youths and citizens are using internet platforms to advance their socio-economic activities.”
Meanwhile, the Zambian cabinet has also approved the introduction of the Cyber Security and Cyber Crimes Bill that will repeal and amend provisions of the Electronic Communications and Transactions Act No. 21 of 2009. The bill will purportedly “promote an increased cybersecurity posture, facilitate intelligence gathering, investigation, prosecution and judicial processes in respect of preventing and addressing cybercrimes, cyber terrorism and cyber warfare.”
In addition to facilitating the establishment of Zambia National Cyber Security Agency (ZNCSA), which is expected to serve as the “coordination centre for all matters related to cyber security at national and international levels”, the proposed law will also criminalise “computer-based offences and network-related crime in line with the Penal Code”. Furthermore, it will “provide for investigation and collection of evidence for computer and network related crime and also provide for the admission of electronic evidence for such offences” as well as “adequately deal with various crimes committed using social media platforms.”
Zambia’s move becomes the latest in a string of steps taken by African governments to undermine internet access and affordability, and weaken the potential of the internet and related technologies to promote free expression, access to information and civic participation. In March 2018, Uganda’s communications regulator issued a directive requiring online content providers to register and pay an annual fee of USD 20. Shortly thereafter, in July 2018, social media taxes were introduced with users required to pay a daily levy of Uganda Shillings (UGX) 200 (USD 0.05) before regaining access to social media platforms which were blocked.
In neighbouring Tanzania, online content service providers and producers have to pay over USD 900 to register with the state for permission to maintain their platforms, according to new 2018 regulations. Meanwhile, in the Democratic Republic of Congo, in mid June, the ministry of communications issued a decree giving online media outlets a month to comply with new regulations or face harsh penalties.

By Juliet Nanfuka |
Uganda’s president Yoweri Museveni has directed the finance ministry to introduce taxes on the use of social media platforms. According to him, the tax would curb gossip on networks such as WhatsApp, Skype, Viber and Twitter and potentially raise up to Uganda Shillings (UGX) 400 billion (USD 108 million) annually for the national treasury. The ministry has already proposed amendments to the Uganda Excise Duty Act, 2014 to introduce taxation of “over-the-top” (OTT) services, and raise taxes on other telecommunications services.
Section 4 of the Excise Duty (Amendment) Bill 2018, a copy of which was obtained by CIPESA, states: “A telecommunication service operator providing data used for accessing over the top services is liable to account and pay excise duty on the access to over the top services.” The amendment defines such services as the “transmission or receipt of voice or message over the internet protocol network and includes access to virtual network; but does not include educational or research sites which shall be gazetted by the Minister.”
According to the proposals, which could take effect on July 1, 2018, OTT services that commonly include messaging and voice calls via Whatsapp, Facebook, Skype and Viber will attract a tax duty of UGX 200 (USD 0.05) per user per day of access. In his letter, Museveni said the government needed resources “to cope with the consequences” of social media users’ “opinions, prejudices [and] insults”. He proposed a levy of UGX 100 (USD 0.025) per day per OTT user. Prime Minister Ruhakana Rugunda supported the suggestion as did the ICT minister, who stated that the taxes were meant to increase local content production and app innovation in Uganda.
If implemented, the proposed tax will be the latest in a series of government actions that threaten citizens’ access to the internet. Last month, the communications regulator issued a directive calling for registration of online content providers and also released tough restrictions on registration of SIM cards. At the USD 0.05 per day suggested by the finance ministry, a Ugandan user would need to fork out USD 1.5 per in monthly fees to access the OTT services. That would be hugely prohibitive since the average revenue per user (ARPU) of telecom services in Uganda stands at a lowly USD 2.5 per month.
According to the Uganda Communications Commission (UCC), in the 2016-2017 financial year, Uganda’s telecommunications sector contributed UGX 523 billion (USD 141.2 million) to national tax revenue, an increase of 14.3% from the previous year’s UGX 458 billion (USD 123.6 million).
As of September 2017, Uganda had an internet penetration rate of 48% while the mobile subscription stood at 65 lines per 100 persons. Research shows that at least one in nine internet users in the country is signed up for a social networking site, with Facebook and WhatsApp the most popular.
Indeed, social media and by extension OTT services, are key avenues for public discourse, service delivery and political engagement. As per the recently released results of the national IT survey 2017/18, 92% of MDAs have a social media presence with most using Facebook, Twitter and WhatsApp as their primary platforms for information dissemination and engagement with citizens. Meanwhile, telecommunications companies have tapped into the popularity of OTTs by offering competitive social media data packages, resulting in what was popularly referred to as “data price wars.”
The amendment bill also proposes a 12% tax for airtime on cellular, landline and public payphones. The latter two previously attracted a 5% tax. The tax on mobile money transfers has been increased from 10% to 15%, while a 1% tax has been introduced to the value of mobile money transactions of receiving and withdrawals.
The proposed taxes do little to support internet affordability in Uganda, which already scores poorly on the Affordability Drivers Index (ADI) that annually assesses communications infrastructure, access and affordability indicators. Currently, 1GB of mobile prepaid data in Uganda costs more than 15% of the average Ugandan’s monthly income. This is much higher than the recommended no more than 2% in order to enable all income groups to afford a basic broadband connection.
The proposed taxes have also raised considerable debate among members of civil society and the business sector, who are concerned that consumers will inevitably be economically affected, while the legal fraternity has called the move unconstitutional. In a country where two social media shutdowns were ordered in a space of three months during 2016, and where some social media users have been prosecuted or arrested over opinions expressed on Facebook and Twitter critical of public officials, these developments are particularly worrying. Already, the perceived high level of surveillance has forced many Ugandans including the media, into self-censorship, turning them away from discussing “sensitive” matters of community or national importance.
The increasing popularity of social media enabled OTT services, brings new regulatory challenges for governments, as many of these services have not required a licence or been required to pay any licensing fee according to the Electronic Frontier Foundation (EFF). However, the regulation of OTT platforms and services may in some cases adversely affect user rights.
On the financial inclusion front, the proposed taxes are also likely to affect mobile money subscriptions and the cost of doing business. In Uganda and across Africa, mobile money has become the primary means of financial transactions, offering new opportunities for productivity and efficiency gains to governments, businesses and individuals.
Feature photo by GotCredit

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