MTN Uganda, Africell and Airtel Uganda have confirmed they will impose the Sh200 (US$0.05) social media tax on SIM cards and fees are payable via mobile money. The companies will charge 1% tax "from whoever deposits, receives, pays and withdraws money using mobile money."

The telco's issued a statement confirming details in response to the Excise Duty Amendment Bill which officially came into effect on 1 July.

Going forward all SIM cards have to be registered for mobile money services.

"We hereby inform the general public of the introduction of new taxes on the Over The Top (OTT) services. Effective 1 July, 2018, OTT services can be accessed upon payment of the OTT tax by the customer of Ushs200 per user per day. Access will be granted for a calendar day from the moment of payment until 11:59 PM of that same day," said the statement.

The companies added that customers have the option to pay in advance – a weekly amount of Sh1, 400 and a monthly amount of Sh6, 000.

David Bahati, State minister for Finance said the new tax will help the government raise enough revenue to pay for social services and pay off the country's growing national debt.

Officials believe they will be in a position to collect US$108 million annually through new taxes.

Media reports claim that of the country's 24 million mobile phone users, 17 million access the internet.

According to the Ugandan Communications Commission (UCC), in the 2016-2017 financial year, the telecom sector contributed Sh523 million (US$142 million to the national tax revenue.