Kampala, Uganda: Small and Medium Enterprises (SMEs) have petitioned Parliament to reform taxes on digital services, arguing that high levies on mobile money and smartphones are limiting financial inclusion and slowing Uganda’s transition to a digital economy.
While appearing before Parliament’s Committee of Finance, Planning and Economic Development on Tuesday, SMEs represented by their umbrella body, the Federation of Small and Medium-sized Enterprises (FSME) called for reductions of excise duty on mobile money and entry-level smartphones.
This comes during the public comment phase on the proposed Tax (Amendment) Bills for the financial year 2026/27.
The Executive Director of FSME, John Walugembe, said a fairer tax framework will unlock broader participation in the formal economy and accelerate Uganda’s transition to a cashless society.
“Under the Excise Duty Act, Cap 336, FSME proposes amendments to the excise duty on mobile money cash withdrawals, reducing the excise duty rate on mobile money cash withdrawal transactions from 0.5% to 0.25% of the transaction value, with a maximum cap of Ushs 5,000 per transaction,” he said.
On the other hand, under the External Trade Act and the Value Added Tax Act, the federation proposed the removal of import duty on entry-level smartphones (CIF value up to UGX 500,000) by applying a 0% rate under HS Code 8517.13.00 and zero-rating VAT on these devices.
Walugembe said reducing the excise duty on mobile money cash withdrawals will ease the burden on low-income earners and MSMEs who rely on digital payments for daily transactions.
“As more Ugandans transact using Mobile Money, the number of MM agents will increase, creating much-needed jobs,” he told legislators on the committee.
Smartphone as an opportunity
In the same breath, Walugembe added that “as more users access entry-level smartphones and come online, digital transactions will increase, boosting government revenue through various channels, including mobile money levies, excise duties on telecom services, PAYE, and corporate tax from digitally enabled businesses. The ecosystem for smartphones will also be catalyzed to grow.”
Members on the committee, which was presided over by the vice chairperson Moses Aleper (MP of Chekwii County), thanked the federation for the proposals and promised to further study them, given the importance of digital inclusion in achieving Uganda’s Vision 20240.
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