The Ugandan government has enforced a new 12% excise duty on data bundles following the scrapping of the daily UGX 200 OTT tax.

Officials said the OTT tax failed to perform to expected levels with many internet users finding ways to bypass the regulation.

The 12% excise duty was approved by Parliament in April after it passed an Amendment Bill 2021.

The new tax is expected to impact data prices which are considered high compared to other countries in the Eastern and Southern Africa.

Telecommunication operators in the country, including Airtel Uganda and MTN Uganda, have confirmed that for now, they will absorb the 12% tax on data until they have fully assessed the impact of the new tax on data prices.

Airtel CCO Amit Kapur said: “Our subscribers will not be required to pay OTT in order to access social media websites and Apps. We shall institutionalise the 12% excise duty tax as mandated by the government of Uganda. However, Airtel Uganda will absorb the excise duty for all pre-paid data packs, thus maintaining our pre-paid data prices. This will allow Ugandan customers to enjoy and connect with the world seamlessly using our affordable and reliable 4G smartphone network with no limitation.”

MTN Uganda said it will maintain current data plans despite the new tax coming into force.

Rhona Arinaitwe, MTN Uganda senior communications manager said the company is still assessing the impact of the tax and that it will have to wait for an informed decision.

“All other standardised and customised voice and data bundles remain unchanged and are accessible on all our platforms. We believe everyone deserves the benefits of a modern, connected life. Accordingly, all customers can now access the internet and social media platforms without paying the said tax. All OTT tax, inclusive data of bundles, has been discontinued.”

The Uganda Communications Commission (UCC) said there were over seven million smartphones connected to the internet (mobile internet) as of December 2020.