The Government of Uganda, through the Ministry of Finance and Economic Development, has proposed to impose a 0.5% levy on the value of transactions withdrawn through agent banking.
According to the Ministry, the measure is intended to ensure that the rich pay their fair share of taxes, since the poor are doing so through mobile money taxes.
The Ministry also made proposals to impose a 5% tax on the sale of non-business assets like land, rental properties in cities and municipalities, a levy of Shs. 1550 per litre of fuel and Shs. 500 per litre of kerosene, and a levy of Shs500 per 50 kg of cement, adhesives, grout, white cement, or lime.
According to the Ministry, the measures are expected to generate a revenue of about Shs200.92 billion.
The Parliament of Uganda is expected to discuss the above taxes during the plenary sitting on May 3, 2024, at 10 a.m.
The Uganda Bankers’ Association (UBA), however, asked Parliament to drop this tax measure as it would discourage Ugandans from using financial services offered by agent banking, yet the strategy has played a huge role in boosting Uganda’s financial inclusion agenda.
The Agent Banking Company was established in 2017 by the Uganda Bankers Association. As one of its initiatives, it supported the Financial Institutions Amendment Act (2016), which enabled commercial banks to engage in agent banking, banc-assurance, and Islamic banking. The regulations to operationalize agent banking were passed by the Bank of Uganda in 2017.