No new taxes on airtime - URA

Over the last couple of weeks, mobile phone subscribers especially on the MTN network have complained of being charged unusual extra money off airtime scratch cards.

For example, a Shs 500 card is now sold at Shs 600 while a Shs 1,000 card is sold at Shs 1200. Shs 10,000 cards are now sold at Shs 14,000.

MTN in a statement said they have not increased airtime prices but agents claimed MTN had cut back on their commission hence the need to increase the prices of the scratch cards.

Some had suggested that new taxes have been slapped on the airtime cards. But in a statement, Uganda Revenue Authority (URA), the tax body says there are no new taxes.

Below is the statement by Ian Rumanyika, URA communications officer

There is no new tax on airtime as some people have been claiming. The Telecoms were not accounting for VAT [Value Added Tax] on the full value of airtime sold to the subscribers claiming to give a discount to distributors.

For example airtime of 10,000 sold at 9,300 and the Telecom companies would declare and charge VAT at 9300 instead of declaring full face value of the airtime.

It’s is important to note that distributors do not offer services to the the Telecom subscribers but to the Telecom firms by distributing their products. Hence it was agreed that Telecoms must account for full value of airtime. The distributors will charge the Telecoms for their distribution services.

The airtime agents or distributors registered for VAT will invoice with VAT while those not registered for VAT will invoice their fee less VAT.

All telecom companies agreed to this move and we had given them the 1st quarter to sensitize their distributors which I believe they did.

The last financial year 2016/17 we have collected both LED [Local Excise Duty] and VAT totalling to [Shs] 288,677,182,696.30. We forecast an addition of over [Shs] 5bn on this measure.

© 2016 Observer Media Ltd