Taxes to blame for hiked Airtime prices

Airtime cards price hike due to tax

The Uganda Revenue Authority collects up to approximately UGX 288 billion each year from tax on Airtime cards. This financial year alone, it will collect an additional UGX 5 billion basing on the new tax measure on Airtime scratch cards.

“Originally telecom companies would be declaring UGX 9300 at that price as VTA chargeable, now we are saying that what should be declared is the UGX 10,000 as the face value of airtime. And, that’s where we charge the 18 percent” Ian Rumanyika, Manager Corporate Affairs, URA said.

“So thats where the challenge has come in but, its just that the main distributors are okay with it because we have engaged them and we have enegaged the main telecom companies also and they have understood it. We gave them time to sensitize their retailers. There are other issue that has come in is from the small the small retailers. ” he added.

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A move by some of the retailers of Airtime cards has now seen a further 10 percent on average being charged on purchase by subscribers, raising complaints from the public as a result.

Patrick Tusubira a network subscriber (featured image) narrates his ordeal to NTV, that when he reached the vendor to by airtime worth UGX 2,000 for both MTN and Airtel, he was told that the price of Airtime increased by UGX 200 and to his dismay, he was shocked. “And we poor people, the situation is not good on our side, no money, we are looking for jobs then the airtime is increasing. Yet you have to have airtime in case you communicate” he added.

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According the sector regulator the Uganda Communications Commission (UCC), telecom players need to immediately enhance public compliance about the new tax measure in a way of sensitization.

The MD UCC Mr Mutabazi Godfrey said “The telecoms are giving business to the people down the chain and people should be happy that they have got some small business running. Now secondly, this is not the my area but I think everybody who does business should be registered for VAT and other taxes. Thirdly there is an option, you can buy your airtime through your mobile money, platform.”

Leading telecos MTN and Airtel in a statement respectively have since advised 16 million of their subscribers should opt for online purchase of airtime and online e-commerce platforms.