Uganda's President Yoweri Museveni has reduced the 1% tax imposed on mobile money transactions to 0.5% and ordered that users charged the original amount be immediately reimbursed.

According to a statement issued by the office of the President, Museveni said the amendment was due to an error in the application of the law. Instead of a total of 1% on all transactions (split evenly between the sender and receiver), both parties are paying 1%, which the government believes to be too high.

The President also differentiated between mobile money tax and social media tax, describing the former as "a necessity".

According to the government, taxing mobile money users will raise sufficient revenue to pay for social services rather than having to continue to borrow from international lending institutions.

However, according to Museveni, accessing the Net and engaging on social media "is a luxury" and should be heavily taxed.

There is no clarity given in terms of who will be responsible for reimbursement or whether or not there is a plan in place to direct this process.

The controversial mobile money and social media taxes were introduced at the start of the 2018/2019 financial year which began on 1 July.

Protests have since flared up and forced government to confirm the legislation would be reviewed.

In its current form, the law requires that all SIM cards have to be registered for mobile money services and users will have to pay Sh200 (US$0.05) daily tax to access social media.