Stakeholders want 0.5% mobile money excise duty slashed

 ________________ 

Stakeholders have called for a 50 percent reduction in the current 0.5 percent excise duty charged on mobile money withdrawals.

John Walugembe, the executive director of the Federation of Small and Medium Enterprises, echoed this call on April 14, 2026, during an engagement with the Finance Committee, which was chaired by vice chairperson Moses Aleper (Chekwii County).

At the time, stakeholders and Members of Parliament were discussing proposed tax measures for the forthcoming 2026/27 financial year.

According to Walugembe and economist Abubaker Mayanja, the move is aimed at deepening digital financial services, increasing transaction volumes and boosting overall revenue collection.

“However, withdrawals through ATMs, over-the-counter transactions and agency banking are not subject to this tax. This creates what we call horizontal inequity, where people doing the same thing, one is taxed, and the other is not. Mobile money remains the primary financial service for a larger population. So, we, therefore, propose that this rate be reduced to 0.25 percent,” Walugembe stated.

Abubaker Mayanja said the current system penalises scale by imposing a rising marginal cost on high-value transactions.

“What do I mean? As soon as you start to transact on mobile money the higher the amount you are transacting is the higher the tax you are paying and this tax is not necessarily on income, it is on payment. Our proposal is to reduce this duty to 0.25 percent with a cap of sh5000,” he elaborated.

“Uganda’s mobile money ecosystem has quietly done what many formal banking systems had failed to do. Since Independence, there were only 3 million accounts until when Mobile Money came, and it went to 30 million,” Mayanja added.

Zero-rating smartphones

Relatedly, Walugembe also advocated for the zero rating of entry-level smartphones during the same session on Tuesday. He said devices costing sh500,000 and below should be exempted to open up opportunities for digitally marginalised populations.

“Because smartphones are essential for accessing digital financial services. So, at the moment, smartphones are subject to a 10 percent import duty and 18 percent Value Added Tax, resulting in a combined tax burden of twenty-eight per cent. This is higher than the zero percent import duty that is provided for under the East African Community common external tariff, and this places us at a disadvantage compared to our neighbours,” he said.

“Because when you lower the cost of gadgets, low-income populations are able to access diverse services. They can market their goods, access e-Government services and so on. This practice has been adopted in Kenya, Tanzania, Rwanda, Nigeria, South Africa, Ghana and Zambia,” Walugembe pointed out.