Govt Defends New Tax On Mobile Money

Government has asked the Constitutional court to dismiss a petition challenging the legality of mobile money services and a 10 per cent tax increment on cash withdrawals.

In her June 13, 20142015 budget speech, Finance Minister Maria Kiwanuka imposed a 10 percent excise duty on mobile money withdrawals, which took effect on August 1, 2014. However, Joshua Tumwine, a Ugandan, petitioned the Constitutional court claiming that it was wrong for Kiwanuka to tax mobile money services because that amounted to legitimizing an illegal service. To Tumwine, this contravenes the Financial Institutions Act 2004.

In an affidavit sworn by Principal State Attorney Josephine Kiyingi, government says the petition is frivolous, prolix and raises no issues for constitutional interpretation.

“The respondent contends that the minister’s act of imposing tax on mobile money services under the constitutional mandate of the Bank of Uganda to properly regulate the financial sector is not in any way in contravention of Articles 2,29 and102,” government says.

In his petition, Tumwine alleges that mobile money services in Uganda constitute a crime under the Financial Institutions Act because they arenot run by financial institutions. He argues that by government imposing a tax on such services, it is simply aiding and abetting a crime.But government insists its actions are within the legal mandate provided for under the same act.

URA defence:

As the second respondent, URA contends that mobile money services are legal and are transacted in partnership with licensed financial service providers throughout the country. Tumwine says he sued URA, too, because it is supposed to aise the minister of Finance on revenue implications, tax administration and aspects of policy changes relating to all taxes.

He, however, claims that the tax body failed to properly discharge its duty in relation to mobile services. Nevertheless, through its legal department, URA has argued that it has a duty to administer central government taxes in accordance with the set laws, regulations as amended from time to time.

URA says the petition is misguided in its entirety since it’s premised on ignorance of the Bank of Uganda Act and Bank of Uganda guidelines of 2013.

“The petition is incompetent in as far as it misinterprets the provisions of the Financial Institutions Act 2014 in relation to mobile money transfer services,” URA says.

According to the ministry of Finance, 14 million Ugandans are currently using mobile money services, with the value of transactions topping Shs 18bn last year.

Source : The Observer

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