Business 16 March 2026 Daily Monitor (Uganda)
Uganda's Mobile Money Taxes Threaten Digital Financial Inclusion Gains
Uganda's multiple taxes on mobile money transactions, including excise duties on withdrawals and agent commissions, are driving up costs and pushing users back to cash. Experts warn this undermines financial inclusion despite the sector's massive growth to 43 million accounts and Shs326 trillion in transactions. Source: https://www.monitor.co.ug/uganda/business/prosper/mobile-money-taxes-reverse-digital-financial-inclusion-5392494
Mobile money has revolutionized finance in Uganda, with over 43 million registered accounts processing 8.4 billion transactions worth Shs326.3 trillion in the 2024/25 financial year, according to the Bank of Uganda. This equates to about 23 million daily transactions, making it a cornerstone of the economy.
However, government taxes are eroding these gains. Key levies include a 0.5% excise duty on withdrawals, 15% excise on telecom fees, and 10% withholding tax on agent commissions. These add significant costs to everyday small transactions used by low-income and unbanked populations.
For instance, withdrawing Shs50,000 can cost up to Shs2,250 in fees and taxes, while a Shs1 million transfer might leave the recipient with only Shs980,000—far more than cash delivery transport costs of Shs4,000-6,000. Jane Nalunga of SEATINI-Uganda notes users often avoid the system if cheaper alternatives exist.
Tax analyst Kato Patrick highlights the burden on informal workers managing small weekly expenses. MTN Uganda’s Rhona Arinaitwe points out that unlike bank agents, mobile money bears extra taxes on transaction values, disproportionately affecting the poor.
Past evidence supports this: The 2018 1% withdrawal tax led to a usage drop and shift to cash, prompting a reduction to 0.5%. Users respond to higher costs by fewer transactions, larger withdrawals, or cash reversion.
Compared to peers, Uganda’s model is outlier—Kenya taxes only fees (12-15%), while Rwanda and Nigeria skip withdrawal duties. Experts propose cutting to 0.25% with caps to boost volumes and expand the tax base via growth.
Despite Vision 2040 goals for digital inclusion, no tax changes are planned as these indirect levies are easy to collect. Balancing revenue and affordability remains key for Uganda’s digital economy.
Source: Daily Monitor (Uganda)