On July 1, 2018, WhatsApp groups went mute, Facebook timelines were empty, and VPN downloads were on the rise as many of Uganda’s estimated 10m internet users searched for ways to access their social media after the infamous OTT tax was imposed on all social media services.
The Over-The-Top (OTT) tax was enforced by the Ugandan government requiring citizens to pay a daily fee of 200 Ugandan Shillings, to access social media platforms like Facebook, WhatsApp, and others.
However, it faced widespread criticism for restricting freedom of expression and hindering access to information, particularly for low-income earners.
What is OTT Tax and how did it come about?
OTT, short for ‘Over The Top’ tax is a tax imposed on digital services offered over the internet, i.e. over-the-top services.
Over-the-top services are platforms that do not use traditional methods like satellite or cable infrastructure to deliver content. Instead, they deliver content directly to the user over the internet.
These include social media services like YouTube, WhatsApp, and Facebook, and streaming services such as Netflix, Hulu, Spotify, and Apple Music, etc.
In Uganda, the OTT tax was imposed on all social media services (Facebook, WhatsApp, LinkedIn, Instagram, Viber, and Skype among others).
A public notice was sent out by all telecom networks requiring their customers to pay UGX 200 per day, UGX 1,400 per week or UGX 6,000 per month to access social media platforms or else they wouldn’t have access.
Public notice about OTT tax
While the daily UGX 200 fee may seem small to some, it was quite significant for many Ugandans, given the country’s economic conditions.
Why was the OTT tax introduced?
The government of Uganda introduced the OTT tax as a source of revenue and to regulate the use of social media platforms and online communication services.
According to the Ugandan government, or more specifically the President; the OTT tax was to act as a means to curb “rumor-mongering”, and to generate much-needed revenue for the country.
The OTT tax negatively affected Uganda’s low-income population and was met with criticism and objections from the general public, critics, and of course, the government’s opposition.
Critics argued against it as a restriction on people’s freedom of expression and access to information, while the government defended it as a source of revenue and a means of regulating online activities.
To evade the social media (OTT) tax, many Ugandan internet users resorted to using Virtual Private Networks (VPNs) and wireless networks in offices.
Although there was (allegedly) a threat by the Uganda Communications Commission (UCC) to block access to Virtual Private Networks (VPNs), it seems it never went into effect, not to my knowledge anyway.
What people said about OTT tax
From Facebook
What happened to the OTT tax?
While the government’s intention to generate revenue was understandable, the impact of the OTT tax on affordability and digital equity could not be ignored.
So, you may be wondering what exactly happened to the OTT tax in Uganda, well, I’m here to answer all your questions so keep reading!
Does the OTT tax still exist in Uganda?
No, the infamous OTT tax was discarded in June 2021 and replaced with a 12% monthly excise duty tax on the internet. From the frying pan to the fire right? Or maybe not? It all depends on your perspective.
According to the Uganda Communications Commission (UCC), the expected revenue from the OTT tax decreased significantly by July 2019.
Either people gave up on using social media due to the tax, or they finally harnessed the power of VPNs (but that’s just my opinion!)
Either way, the OTT tax failed to generate the anticipated UGX 248 billion estimate.
The new Uganda Internet tax
After the failure of the controversial OTT tax, a 12% excise duty tax was approved and implemented by the Parliament on July 1, 2021.
This new tax exists in addition to the 18% VAT, therefore, the total tax on internet use is 30%.
The internet tax led to an increment in the cost of data bundles across all networks, and unlike the OTT tax, a VPN will not help you out of this one!
What Ugandans said about the new Internet tax
From Facebook
Going forward
Well, over 2 years down the road, the Internet tax doesn’t seem to be going anywhere any time soon, and since there’s no way around it, I guess we’re learning to live with it and try to make the best of the situation.
However, as one person stated; it all depends on your perception and your demand for internet/data. If you believe you can do without it then by all means…
It is worth noting that while all other services were unblocked when the OTT tax was ditched, Facebook is still not accessible on most networks unless you use a VPN!
FAQ
Q. When was the OTT tax introduced in Uganda?
The OTT tax was introduced on 1st July 2018, and it was dumped 3 years later, on 1st July 2021.
Q. How do I access Facebook now?
You can simply download and install a VPN (Virtual Private Network). A VPN will mask your location as well as the service you are accessing over the internet.
You therefore will be able to use your Facebook.
Some popular VPN services include Psiphon, Windscribe, NordVPN, and Tunnelbear.
Q. Who is exempted from the new internet tax?
According to URA, data used to access education and health services is exempted from paying the 12% internet tax.
A list of licensed health and education providers was to be accessed from the Ministry of Health and Ministry of Education, for purposes of taxation.
Conclusion
In the end, the tale of the OTT tax in Uganda is part of a larger global story about how countries deal with both the benefits and challenges brought by the digital age.
It highlights the significance of carefully considering policy development; taking into consideration the evolving nature of technology and its role in society, and then working towards striking a balance between revenue generation and making sure everyone can easily access the internet.
