Uganda's Mobile Money Taxes Burden Low-Income Users Far More Than Banks

Mobile money services, popular among Uganda’s low-income households, carry significantly higher tax burdens than traditional banking. For a Shs1 million withdrawal, users face around Shs6,500 in taxes, compared to just Shs1,500 for the same amount via bank or ATM.

Civil Society Budget Advocacy Group (CSBAG) research highlights that mobile money costs can reach 21 times those of banks for large transactions. Executive Director Julius Mukunda notes this disparity punishes vulnerable users, whose typical dealings are under Shs50,000.

The Tax (Amendment) Bill, 2026 proposes a 10% withholding tax on telecom and mobile money commissions, expanding the tax net but raising concerns. CSBAG warns it could drive users back to cash, undermining the cashless economy push in the tenfold growth strategy.

Current 0.5% excise duty on withdrawals, unique in East Africa, plus VAT on fees, stalls digital goals like 71% mobile money usage by 2029. A 2018 tax hike already cut usage by 40%, per International Growth Centre data.

Experts advocate halving the duty to 0.25%, capping taxes at Shs5,000 per transaction, and exempting small withdrawals under Shs20,000. They also push exempting low-cost smartphones below Shs350,000 from import duties and VAT to boost penetration from 33%.

Studies from GSMA and Economic Policy Research Centre project that tax cuts could add 4 million internet users, 1.79 million jobs, and Shs2.1 trillion in revenue by 2030 through higher data and mobile money volumes.

Agents like Jennifer Tumwebaze report users shunning digital platforms due to costs, now Shs23,000–25,000 for Shs1 million withdrawals including fees and taxes.

Business leaders from KACITA echo calls for reductions, arguing high taxes shrink incomes and youth opportunities in telecom.

This article is based on reporting from the Daily Monitor.