As predicted by ICT experts, Ugandans have found virtual private networks (VPN) the 'ultimate solution' to bypass paying the Shs 200 daily excise duty charge on Over-The-Top (OTT) services.
The tax, christened ‘social media tax’, affects social media platforms such as Facebook, WhatsApp, LinkedIn, Instagram, Viber, Skype among others.
While government expects to collect between Shs 400 billion and Shs 1.5 trillion annually from the social media users, realisation of this target may be hard going by the efforts Ugandans are taking to avoid paying the tax.
For example, the search for 'VPN' on the world’s most popular search engine, Google, has skyrocketed and hit the maximum value (100) in the past few hours when the tax came into effect.
Between June 24, 2018 and June 29, 2018 at 7am, the search for VPN had not gone beyond Google’s search trend value of '5'. In fact, as at June 24 at 7am, there was '0' search.
'VPN' search hit the maximum value (100) on July 1 at 1am – just an hour after the Internet Service Providers (ISPs) switched off the social media platforms. VPN masks the user’s exact location and circumvents the blockage.
The ISPs – mostly telecommunications companies (MTN, Airtel and Africell) announced in a joint statement that the effective July 1, 2018, internet users would have to pay Shs 200/daily, Shs 1400 a week or Shs 6,000 a month in order to access social media platforms.
Indeed, popular platforms such as Twitter, Facebook, Instagram were switched off by the telecoms on July 1 at midnight. Some subscribers even accused MTN of 'switching off all internet' for those who who had not paid the tax. The Observer couldn't independently verify this accusation. The tax can be paid using MTN Mobile Money by dialing *165*2*8#, Airtel Money by dialing *185*2*5# or Africell Money using *144*2*#5. Africell customers can also pay for the tax using Airtel and MTN Money.
This is the third time in recent times Ugandans have run in droves to VPN to circumvent internet blockade. The first time was in February 2016, when telecommunications regulator, Uganda Communications Commission (UCC) directed ISPs to shut down social media platforms - mainly Facebook and Twitter ahead of the general elections.
Government, said then, that the shutdown was necessitated because Ugandans had taken to social media to incite violence, and also, discredit President Yoweri Museveni as candidate who was seeking and won a controversial fifth term marred with irregularities including voter bribery, election rigging.
Another social media shutdown was ordered in May 2016 ahead of Museveni’s swearing in ceremony at Kololo Ceremonial Grounds. Government accused the opposition politicians, most of whom were under house arrest, of using social media to mobilise their supporters to disrupt the swearing in ceremony of President Museveni.
In 2016, Trust.Zone VPN was downloaded at least 520,000 times by mobile and desktop devices in Uganda within just two days - overwhelming the site servers and making it unreachable for about 30 minutes. A report by Internet World Statistics (IWS) indicated that 1.5 million internet users from Uganda in just three days had downloaded and were using VPN after the February 2016 blockade.
SOCIAL MEDIA BOYCOTT
Some activists have taken to social media using the hashtag #NoDataWeek to rally on Ugandans who have more than one sim-card to drop at least one of them so the telecoms they accuse of failing to fight for them, can also lose some revenue. With VPN usage, the telecoms still earn from data bundle purchases.
“Exactly my point, I personally have no objection to paying tax but I grow goose bumps when individuals swindle hefty amounts and they get away with it” photographer Nicholas Bamulanzeki wrote on Twitter.
ILL CONCEIVED TAX?
A government official who did not want to be quoted said the social media and mobile money tax “was ill conceived, ill advised and will therefore only be paid by a few ignorant individuals.”
According to the official, cabinet and parliament ignored technical advice on taxation of social media because, not only would it be hard to collect the taxes, but it would also cripple innovation of young Ugandans as internet prices which were becoming cheaper will rise again.
The tax is as ill-conceived as the time when government blocked unregistered sim-cards after the murder of police spokesperson Andrew Felix Kaweesi in March last year, he said. Asked how government was going to lose revenue, he said many Ugandans will just switch to VPN.
"The ones who are capable and rich enough to pay the tax are going to switch to VPN. The poor ones who used to buy bundles of Shs 500 and Shs 200 will just go offline. I just don't see how government will gain on this one. Government lost 20-30% in revenue when they switched off the unregistered mobile sim-cards. We expect the same loss percentages with the mobile money tax,” he said.
Effective July 1, every mobile money transaction will draw 1 per cent of the amount either received, deposited, paid or withdrawn on top of the normal transaction fees and charges. Previously mobile money deposits were free.
Museveni recently said taxing use of social media would not only generate for government revenue of Shs 400 billion annually, but it will also help stop social media users from spending most of their time ‘rumourmongering’ and become more productive.
I refuse to be #blackmailed. My rights are inherent. If I have bought data, I have paid the taxes on it already. PERIOD— Godfrey S Kyedza™️ (@kyedza) July 1, 2018
UGANDAN GOVT starts enforcing #SocialMediaTax today: The reaction of Ugandans.— Masake Anthony (@masakeonline) June 30, 2018
Civic engagement is no longer optional. We must ask hard questions, take decisions, vote wisely & support human rights defenders like our lives depend on it.
There's no room for apathy. #NoDataWeek pic.twitter.com/pGoaPc0mvg
I agree with the message but we should not push for boycotts, here are my reasons why ?https://t.co/mMMz0HESnT— #ExplodingNoema (@henryshaykins) June 30, 2018
Download the *Unseen Online* VPN. Thank me Later. And also, on monday, we're in court challenging this unfairly imputed tax.#nodataweek campaign of boycotting data will commence on announcement.— Daniel Bill Opio?? (@BillOpio) June 30, 2018
I am 101% sure that these #socialmediatax will also be 'eaten' or 'vanish'...Thank you MEN for your legacy. You shall never be forgotten???— Nick (@neekokasirye) July 1, 2018
I was with most of my friends yesterday evening but today none is in the country.— Daron (@bartlettdaron) July 1, 2018
They are all tweeting from abroad ?#SocialMediaTax
And so it begins. Hopefully in a week's time I'll have figured out a way around this rubbish. #SocialMediaTax is just ?— Talkative Rocker (@beewol) July 1, 2018
Ssebo @KagutaMuseveni You're going to collect a lot of money, but guess what, your people are going to steal it all.
2 steps forward, 9 steps backwards! pic.twitter.com/U17IqR4GKD