MOBILE MONEY TAX

Mobile money has become a vital tool for financial inclusion and economic participation in Uganda, especially for those who lack access to formal banking services. However, mobile money users also face some challenges, such as the mobile money tax that was introduced in 2018. This article will explain the mobile money tax, how it affects you, and how you can cope

. We will also share some tips and insights from Uplex and Associates, your reliable partner in the financial journey.

What is the Mobile Money Tax?

The mobile money tax is a government policy that aims to broaden Uganda’s revenue base by taxing mobile money transactions. Initially, the tax was set at 1% of the value of every transaction, affecting both senders and recipients. However, after public outcry and protests, the government revised the tax in 2019 to only apply to withdrawals at 0.5%. This means you only pay the tax when you withdraw money from your mobile money account, not when you send or receive money.

How Does the Mobile Money Tax Affect You?

The mobile money tax affects you by increasing the cost of using mobile money services. You may pay a significant tax over time depending on how often and how much you withdraw money from your mobile money account. This may reduce your disposable income and savings, mainly if you rely on small, frequent transactions for your livelihood. For example, if you withdraw 100,000 shillings weekly from your mobile money account, you will pay 500 tax every time, up to 26,000 shillings per year.

How Can You Cope with the Mobile Money Tax?

The mobile money tax may seem like a burden, but it does not have to be. There are ways to cope with it and minimize its impact on your finances. Here are some suggestions from Uplex and Associates:

• Budget Wisely: Budget wisely is the first step to coping with the mobile money tax. You should know how much tax you pay every time you withdraw from your mobile money account and plan accordingly. You should also track your income and expenses and prioritize your needs over your wants. By doing so, you can avoid unnecessary withdrawals and save more money.

• Explore Alternative Transaction Methods: Another way to cope with the mobile money tax is to explore alternative transaction methods that may have lower fees or offer more benefits than mobile money. For example, consider using bank transfers or cash payments for some transactions, depending on their nature and convenience. Bank transfers may have lower fees than mobile money withdrawals but require more documentation and verification. Cash payments may be more convenient than mobile money transactions, but they may also be riskier and less traceable. You should weigh the pros and cons of each method and choose the one that suits your needs best.

• Form Savings Groups or Cooperative Societies: A third way to cope with the mobile money tax is to form savings groups or cooperative societies with others who share your goals and interests. By pooling your resources together, you can enable bulk transactions that reduce individual costs and increase collective benefits. For example, you could form a savings group that collects contributions from members every month and distributes them as loans or dividends at the end of the year. Alternatively, you could create a cooperative society that engages in joint production or marketing activities that generate income for members. However, being careful about such arrangements' potential challenges and risks would be best. Some savings groups may have high-interest rates, hidden fees, or fraudulent practices. Some cooperative societies may face governance issues, mismanagement, or external interference. You should ensure that you join reputable and trustworthy groups or organizations with clear rules and regulations and uphold accountability and transparency among members.

Uplex and Associates at Your Service

We hope this article has helped you understand the mobile money tax and how to cope. At Uplex and Associates, we take pride in being a guiding beacon for our clients, helping them make informed and wise decisions. We believe in offering services and building lasting relationships rooted in trust and mutual growth.

Please get in touch with us if you have any questions or concerns about the mobile money tax or any other financial matter. We are here to listen, understand, and offer tailored solutions that suit your unique needs. You can reach us through any of these platforms:

• Email: upconsultancy8@gmail.com

• Phone: +256 787226112

• Website: www.uplexassociates.com

Together, let’s forge a path that leads to financial stability and prosperity, even in the face of changing tides.