Tax on data bundles in Uganda: impact on iGaming

Following the abolition of the daily UGX 200 OTT tax, the Ugandan government has placed a new 12% excise levy on data package This current trend is unfavorable for several economic sectors that largely depend on the internet.

A 12% excise levy on data packages for internet users is seen as a major blow to industries such as online gaming and retail.

These will help and annoy consumers and those contemplating internet adoption. It is intended to influence consumer behavior such as average internet use time. As the cost of internet data bundles rises, this independence and comfort will be lost. Customers will have to pay extra for internet data packages. Unsurprisingly, numerous telecommunications companies found methods to avoid the legislation, according to a Ugandan official. The 12 excise duty was authorized by Parliament in April 2021. The new levy is due to high data costs compared to other nations in Eastern and Southern Africa.

Telecommunications businesses in Uganda, including big players like Airtel and MTN, have agreed to temporarily bear the weight of the new 12% data tax until they have properly examined its effect on data rates.

The issue is how long these businesses can absorb the 13% tax before passing it on to consumers.

Despite the worldwide Covid-19 outbreak that has crippled companies, this action is premature. Due to poor internet penetration and smartphone uptake, sports betting companies depend on retail and a bit online. They adapted their company to digitization. Providing customer service during the country’s first nationwide lockdown was made feasible by internet access. As a result, the country is in the third wave of viral propagation, and the administration has announced a new national lockdown.

The high cost of internet data has slowed the adoption of digital transformation in businesses.

One of the major drawbacks of the iGaming sector in Africa is the high cost of internet data bundles. Compared to other continents, Africa has the most costly mobile data in terms of actual and relative income.

For example, in Equatorial Guinea, Zimbabwe, and Swaziland, a gigabit of data costs over $20. Across the continent,

the average price is $7.04, with most nations charging more than the UN Broadband Commission’s aim of 2% of monthly income. The UN Broadband Commission for Sustainable Development defines cheap internet as 1.5 GB of mobile data costing less than 2% of typical income.

Today, Uganda still has a large disconnected population with no alternatives. In Africa, 800 million people reside in places that are not served by networks. Sub-Saharan Africa has 44% of the world’s uninsured. Although the Uganda Communication Commission (UCC) claims just about 7 million cellphones are online (mobile internet). By December 2020, approximately 46 million individuals will be without internet connection, a substantial relative deficit in that demographic.

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