The taxes are part of the amendments included in the Excise Duty Bill, 2018, which the country's Parliament approved and passed on May 30th, 2018.

How it started

In March 2018, President Kaguta Museveni, 73, proposed measures to generate additional revenue to the country's coffers and also, maybe reduce "borrowing and dependency on foreign aid".

The government is expected to get UGX280bn in grants to facilitate this financial year's UGX32trillion budget.

Museveni suggested an introduction of a "small fee" on over-the-top (OTT) services such as Facebook, WhatsApp, Instagram among others; a move he estimated would generate about UGX400bn additional revenue.

The "small fee", which is now commonly known as social media tax, was also intended to curb the spreading "lugambo" (gossip).

Read Also: No more games - Museveni on social media & mobile money tax

Excise Duty Amendment

On May 30th, the Parliament approved and passed the amendments which were contained in the Excise Duty Bill, 2018.

Part of its objectives was to raise the point of accounting on telecommunications services by introducing UGX200 daily tax per user on over the top services and 1% tax on the total value of mobile money transactions on receiving, payments and withdraws.

The amendments also sought to introduce interest for unpaid excise duty and limit the interest payable to the amount of the unpaid principal tax; to amend the excise duty in respect of certain ex­cis­able goods; to in­tro­duce ex­cise duty on cook­ing and on mo­tor­cy­cles at first reg­is­tra­tion.

So, what exactly is social media tax?

This tax is formally known as Over The Top (OTT) tax; it was first proposed by the president in March to raise revenue and restrict gossip on social media.

OTT tax targets users of social media platforms such as WhatsApp, Facebook, Instagram, Twitter among others.

The UGX200 (equivalent to just a nickel) daily tax per user must be paid before users can access their favourite social media platforms, apart from those intended for research and education -- like Google.

This fee is paid directly using mobile money services and its duration expires at 11:59 PM -- amounting to just a calendar day and not 24 hours.

About 4 million people of Uganda's population, estimated to be 40 million, use the internet, according to the Uganda Communication Commission.

Also Read: First lawsuit filed against the controversial social media tax

How Ugandans are accessing social media platforms

A section of Ugandans is already paying the tax. The payments can be made daily, weekly or even monthly; depending on the usage plan.

Most Ugandans are using a Virtual Private Network (VPN) connection to get around the tax. VPN allows users to connect to servers that make it appear that they are in a different location, say Russia.

"According to BestVPN.com – a VPN comparison site – the number of Ugandan visitors to its service rose 1567 per cent when social media tax went life"

The government has since announced plans to block access to Virtual Private Network (VPN) services and they truly think it's possible.

Also Read: VPN accessibility to be restricted as Ugandans invade social media tax

And mobile money tax?

This is another contentious tax that came into effect on July 1st and has since caused public outcry, including SMEs and digital friendly startup environments.

Until July 4th, telecommunication services have been charging 1% of the total value of mobile money transactions, deposits, withdraws and transfers.

The tax is levied on top of the existing transactional charges incurred by both the sender and receiver from different service providers.

Museveni, Uganda's president since 1986, made a clarification on Wednesday saying 1% tax was a miscommunication; that it ought to be 0.5%.

Mobile money transactions have reduced by 60% since the tax became effective, according to privately owned newspaper Daily Monitor.

Protests

An association that regulates mobile money operators in Uganda's capital, Kampala, on Thursday marched in protest of mobile money tax and want to petition Speaker of Parliament over the same issue.

Other Ugandans were using #ThisTaxMustGo to express their grievances on social media.

Legal efforts

A group of concerned citizens filed a petition to the Constitutional Court challenging social media tax.

The petitioners are asking the court to declare the law unconstitutional arguing that social media has "revolutionized every aspect of human endeavour through the democratization of internet, and online information access, and digital expression through various online fora".

Last Nail?

On July 4th, Museveni clarified on the controversial social media and mobile money taxes -- in a lengthy statement on Facebook. The taxes are here to stay!

He said "all the moral reasons are in favour of social media tax" and "social media chatting is a luxury by those who are enjoying themselves or those who are malicious".

He added that "is it too much for users of the mobile money senders and receivers to also make a modest contribution to the development of their country?".

Critics argue that this move is aimed at suppressing criticism of Museveni's policies and governance.