Internet tax - Afrikan Heroes

Uganda Imposes 12% Tax On Internet Data With Effect From July 1, 2021

May 4, 2021

Already considered one of the most expensive in Africa, the cost of Internet access has increased further in Uganda. Despite consumer protests, the government remains stoic in meeting its financial targets that will help pay off public debt. To this effect, the Ugandan government has imposed a 12% excise tax on data plans.

The 2021 excise tax bill, in which this new tax appears, tabled on April 1 by Finance Minister Matia Kasaija, was adopted on Thursday April 29 by the Ugandan Parliament. The new tax officially comes into effect on July 1, 2021.

The House passes the Excise Duty(Amendment)bill,2021. This will see a shs100 tax on fuel & 12% duty on internet data among others. The proposal of shs100 on each kilo of what was however dropped. #PlenaryUg
— Parliament of Uganda (@Parliament_Ug) April 29, 2021

Here Is What You Need To Know

Through this tax, which is part of a series of fiscal measures adopted — including the introduction of a tax of 100 shillings (0.028 USD) for a liter of fuel — the government says it wants to increase its revenues which will help to mop up the public debt.

By December 2020, Uganda’s total public debt had reached a record 65.82 trillion shillings (US $ 18.4 billion).

As of December 2019, it was 49 trillion shillings.

It increased by 16.82 trillion shillings due to increased government borrowing.

Sub-Saharan Africa has just one country among the top ten cheapest in the world — Sudan, in fifth place overall at USD 0.27. The region also has six out of the ten most expensive countries in the world, with Equatorial Guinea the most expensive in the world (USD 49.67), joined by Saint Helena (USD 39.87), São Tomé and Príncipe (USD 30.97), Malawi (USD 25.46) and Chad (USD 23.33) at the bottom of the table. *Source: Cable.co.uk*

The Implications Of The New 12% Data Tax Regime

The data tax follows the failure of the tax on over-the-top (OTT) applications — WhatsApp, Twitter, etc. — introduced in 2018.

In the second quarter of 2020, while the number of mobile Internet subscribers was 18.9 million, the Communications Commission (UCC) estimated that only 11.3 million subscribers paid the tax on OTT.

The rest of the users have switched to virtual private networks (VPNs) to stay out of sight of the government.

With an excise duty of 12% on any internet package purchased, access to connectivity is set to be more expensive for Ugandan consumers, who criticized the move, 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 the report “Worldwide mobile data pricing 2021: The cost of 1GB of mobile data in 230 countries” from Cable.co.uk, Uganda is the 19th country in Africa with the most expensive average cost per Gigabyte, or 1.56 USD.

Uganda data tax Uganda data tax

Nigeria Has A New Law For Companies. Here Is What It Means For Startups

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer

Madagascar Reduces Internet And Telecoms Tax From 10% To 8% In 2021 Finance Law

November 20, 2020

Internet and telephone users in Madagascar will heave some sighs of relief on their bills come 2020. The small island country, off the coast of East Africa and with a population of 26 million( only about 3 million of whom are connected to the internet) has lowered its excise tax on telecommunications. The tax, which was reduced from 8% to 10% in the 2020 finance law, to the great displeasure of telecom operators and consumers, is again showing at 8% in the 2021 finance bill.

madagascar internet tax madagascar internet tax

Here Is What You Need To Know

According to Ranesa Firiana Rakotonjanahary, the secretary general of the Ministry of Posts, Telecommunications and Digital Development (MPTDN), the drop is the result of a study conducted by the ministry. The study shows that by reducing the excise tax, its impact will be beneficial at all levels to consumers.
However, in order to avoid the same blemishes as in 2019, when the tax was still 8%, the MPTDN provided for strict control of Airtel, Blueline, Orange Madagascar and Telma. With this surveillance of operators, the Malagasy government wants to ensure that there will be a real drop in prices, and not only for users of social networks as has been the case in the past.
Ranesa Firiana Rakotonjanahary believes that the impact sought through this new tax cut should also largely benefit businesses that need Internet access for their activities.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer

Zambia Will Begin Internet Tax on WhatsApp, Netflix, Others In January, 2020

December 11, 2019

Barring any last minute changes, the Zambian government will start taxing internet services from January 2020. The move could effectively see internet services such as Netflix, WhatsApp and others taxed. According to Zambia’s VAT Amendment Bill 2019 which was issued on 20th November 2019, taxing of internet services companies will come into operational January 2020.

Here Is All You Need To Know

Under the new tax regime, companies offering internet services in Zambia but domiciled out of the country will be expected to appoint a tax agent to handle all tax matters in the country.
The Bill defines “Electronic Commerce” as the buying, selling and advertising or marketing of goods and services using the internet, mobile telecommunication networks and other electronic commerce infrastructure.

“A taxable supplier shall issue a tax invoice for the supply of goods and services using an electronic fiscal device. A taxable supplier who fails to issue a tax invoice commits an offence and is liable on conviction to a penalty not exceeding 300 penalty units or to imprisonment for a term not exceeding three years or to both,” the Bill says.

In the Bill, “Electronic Service” is defined as a service capable of delivery of data across multiple electronic platforms.
The Bill says the Supplier who does not have a registered office or Permanent address in Zambia shall appoint a tax agent resident in the Republic to act on behalf of the Supplier in tax matters.

“For the purposes of this Section, “Supply of Services” includes the supply of a service that is made by a supplier who is resident in Zambia or carries on a business outside the Republic to a recipient who is resident in Zambia.”

Comments:

With an estimated number of 7.1 million people connected to the internet in Zambia, out of its population of 15 million, Zambia, for the first time, is showing other African countries that global internet giants such as Netflix that makes money off Zambians could be taxed. Extending the tentacles of taxation across the barriers of geography could be a deal breaker for the nascent internet industry in Africa. However, it could be argued that companies with physical presence are already paying so much taxation. With Zambia’s tax to gdp ratio ( last reported in 2013) standing at 20.3 %, it makes sense that the Southern African country, rich in copper and other mineral resources, is turning to the 14.3 percent of its population who access the internet.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world