COMMENTARY: Taxing Social Media Platforms in Uganda; What could go wrong?


It’s with a deep concern for the future of the Internet in Uganda that I write this. I have been following these discussions closely but to suggest taxing Social Media platforms in this current Uganda is simply ridiculous. Social Media Platforms have provided and continue to provide the fastest avenue for business communication especially in the marketing department and taxation of such can create a chain of events that can lead to loss of revenue from the different stakeholders.

Lack of direct Government Support for Local Innovators
Technology, to the consumer, presents itself as a platform for accelerating innovations in any sector and this creates a “can-do-it-by-magic” effect. The writer’s expectation of the Internet Society of Uganda in being innovative is valid, however, we all know that this innovation cant happens without crucial partners, and by partners I mean those who actually act on the policies set out. Sadly, many government policies on ICT are either not implemented, mainly due to red-tape and those that are implemented are set out to “organise” the ICT sector, which in the short run hurts ICT businesses in Uganda.

About 90% of ICT firms in Uganda are not certified, making it difficult for them to get the government contracts given out to ICT firms from other countries. Much as I understand the necessary documentation to get certified and I respect the process, you can agree with me that there is less interest in government paying the high cost in the short run through awarding contracts to local ICT Firms and thus ensuring a future where more Ugandans are employed thus directly contributing to increasing the tax base, which is the objective at this time.

ICT as a Tax Base Widening Tool
To directly answer the query of the writer, the solution to widening the tax base is not taxing Social Media platforms simply because many Ugandans use them. I strongly believe, and I know that we have capable local ICT firms that can take on the task of creating tools for a government that can help them reduce costs in their operations through Automation and Compliance. The main reason as to why this is not the case is simply due to the subsistence mindset, i.e. the “Who-Do-You-Know” kind of thinking, where projects are awarded on that basis after a money exchange and not on merit.

ICT can and is playing a big role in widening the tax base. We all know that many institutions, ranging from Bank of Uganda to URA, to Police are all embracing ICT to increase efficiency through automation and ensure compliance through an interface with computer systems which can be corrupted by human language and instincts. Bank of Uganda has introduced an Automated Clearing House (ACH) and so cheques shall be processed faster, URA has upgraded their taxation system to favour faster clearance at the border, Police is testing biometric authentication for driving permits to eradicate forgery and reduce the time it takes for someone to verify that they are eligible drivers.  So taxing the medium through with small and medium enterprises market themselves without signing “billboard” money is like killing the mother goose that lays golden eggs. Its just simply wrong since many local ICT firms are not given a chance by their own government to create tools that impact the nations, instead, many of the tools mentioned above are imported from India, SouthAfrica and China.

Way Forward

It’s not enough to discuss the taxation of Social Media platforms and not give solutions.

The government should give more ICT contracts to local firms on merit so as to secure a future of increased employment since these local ICT firms shall employ more of Ugandans. This shall easily translate into a wider tax base.

  • The government should appoint tested and proven key ICT players to aid in policy-making and followup. The best suggestion would be to partner with local Tech Hubs like OutBox, Innovation Village and Hive Colab. These guys are serious about what they do and the results are there to show it. This shall reduce on red-tape and further help on nurturing local ICT firms for government contracts and thus easily be following them up with their taxation. This also accelerates innovation and gives hope to ICT firms in the country so as to avoid the dependency syndrome i.e. Firms competing for external funding.
  • An Online Portal for Open Source Government tools is also key in ensuring that Government stops spending too much on external firms and depend on these locally provided tools by local ICT firms. This shall attract support fees where the ICT firms that made these tools benefit directly from the government and thus increasing jobs, sustainability and the tax base.
I strongly believe that introducing this kind of taxation shall cause reduced revenues for telecoms since these tools shall be abandoned for other avenues of communication. The loading of WTF bundles shall greatly reduce and I don’t think telecom companies shall be happy about that. It shall also create an opportunity for alternative tools to be made and adopted which might lead to interesting outcomes, both positive and negative.