Uganda: URA targets mobile money agents commission for tax

Money Transfer

Uganda Revenue Authority has started registering mobile money agents so as to tax their business, The Observer has learnt.

Cyprian Chillanyang, URA’s commissioner for Domestic Taxes, says the response from the telecom companies, who have provided lists of their agents, is good.

“We have started the exercise as we engage them [on what they are required to do],” Chillanyang added.

Mobile money agents earn a commission whenever they carry out a transaction and according to URA this should be filed as income returns and taxed accordingly. Income Tax is a direct annual tax on one’s income.

URA is targeting all agents handling transactions above Shs 1m per day, with telecom companies acting as withholding agents for the tax body. The telecoms are required to withhold six per cent on behalf of URA. However, some agents say they have not been informed of the move.

Martin Lubega, operating along Kampala road, said URA is yet to approach him for registration and is worried the tax might eat too much into his profits.

“They [tax-men] are following us everywhere,” Lubega said. “We sometimes make losses as some customers cheat us when they give us fake notes. Others claim to be depositing when they are actually sending money, which reduces on our commissions – now here comes URA; what should we do?”

This financial year, the government slapped a 10 per cent tax on money transfers, including mobile money. Telecoms immediately reacted by increasing the transaction fees. MTN Uganda, for instance, adjusted its fees for sending money upwards by an average of Shs 480, starting on July 1.

Other telecoms also raised theirs by an average of Shs 200. Earlier this year, Uganda Mobile Money Agents Association (UMAA) put the number of agents in the country at 1,200.

Phiona Wall, Airtel Uganda’s publicity official, said if URA is seeking to implement the tax that was read in the budget, then the industry is prepared for it.

“If it is another way of taxing agents, then it will again be transferred to the final consumer,” she cautioned.

“I think mobile money transactions should be incentivised – as most people who use them are low-income earners,” Wall added.