CSOs, Mobile Money Agents calls for reduction of tax on digital financial business.

Uganda applies a 0.5% excise duty on mobile money withdrawals, alongside a 15% excise duty on transaction fees, while other withdrawal channels are not subject to the same tax on value.  

This according to Civil Society Organizations (CSOs) and Mobile Money agents creates unequal treatment and incentivises users to shift away from mobile money.

Thy have called for a reduction of the of the tax from the current 0 5% to 0.25% to boost financial inclusion and more taxes and reduced cost of transactions.

While talking to journalists at a press conference held on Thursday 9th April 2026 in Ntinda, the Executive Director CSBAG Mr Julius Mukunda said that urged parliament and the Ministry of Finance to adopt reform measures in the current tax amendment cycle including harmonizing and reduction of excise duty on financial transactions and removal of Import Duty and Zero-Rate VAT on Entry-Level Smartphones.

“CSBAG proposes to harmonise excise duty on all cash withdrawals across mobile money, ATMs, over-the-counter bank transactions, and agent banking at a reduced rate of 0.25%. Reducing the rate from 0.5% to 0.25% while expanding it to all channels lowers the cost of transactions and eliminates arbitrage between platforms” he said.

He said this reform will eliminate the discriminatory tax treatment that penalises mobile money users, who are predominantly low-income, reduce the cost of transacting on digital platforms, encouraging greater adoption and usage frequency, expand the tax base by bringing currently untaxed ATM and bank withdrawals into the excise net at a modest, fair rate among other benefits.

In the removal of Import Duty and Zero-Rate VAT on Entry-Level Smartphones, Mukunda said proposed the remove of the 10% import duty and apply a 0% VAT rate on entry-level smartphones with CIF value less or equal to UGX 500,000 which he said are “subject to a combined tax burden of 28%, which significantly raises the cost of accessing digital platforms. This contributes to low smartphone penetration of 33%, compared to a regional average of 50%”.

Jenipher Tumwebaze a Mobile Money Agent decried the high taxes on withdrawals while transacting mobile money business which she said is sending away customer to resort to alternatives methods this killing the business an the taxes there in.

“Customers are now opting for banking agents to withdraw their money because its far cheaper that the cost of withdrawing similar amounts. It’s costing the young people and women who are the majority in this business” she said.

The FY 2026/27 tax proposals target UGX 2.3 trillion in additional revenue, largely from consumption and transaction taxes that raise the cost of living and disproportionately affect low-income households.

According to CSBAG, despite revenue growth of 46% over four years, the tax-to-GDP ratio remains stagnant at 13–14%, below the 15% minimum benchmark and the 18.6% Sub-Saharan Africa average, reflecting a structurally narrow tax base.

“In an economy where nearly 80% of activity is informal, increasing tax rates on a limited base will continue to undermine compliance, equity, and long-term revenue growth. Uganda cannot tax its way to higher revenue through higher rates alone” said Julius Mukunda.