Ugandan govt blocks VPN as citizens vow to dodge new social media tax
The Ugandan government has blocked Virtual Private Networks (VPN) that several Ugandans have installed on their mobile gadgets in a bid to dodge government’s new social media tax.
The Shs200 (Ksh6.6) daily social media tax took effect on Sunday, forcing some Ugandans to resort to VPN, a technology that creates a safe and encrypted connection over a less secure network, such as the internet.
However, the executive director of Uganda Communications Commission (UCC), Mr Godfrey Mutabazi, said they have all the needed software to block VPN services.
“We have technology that will block the VPN services so that no one dodges the taxes. Different VPN systems continue to come with more advanced features to circumvent government crackdowns but governments around the world have continued to block them,” Mr Mutabazi said.
He added: “We have all the systems needed to block the virtual private networks already here and the government will move anytime to effect it.”
Mr Mutabazi also said in situations where some individuals have circumvented the system, they will be subjected to the same taxes, with possible surcharges to access the Over The Top (OTT) services.
Whereas many have successfully installed VPN, they have had to incur extra costs because some VPN networks are also among those taxed.
A similar message from mobile telecommunications company MTN reads: “VPNs are a common global method of accessing internet services while masking the nature of the internet service being used. It is because such VPNs can then be used to access OTT services indirectly that government has included such sites as being subject to OTT tax.”
“Unfortunately, the creation of a VPN service is relatively easy and takes place outside of Ugandan borders. For this reason, the operators will block access to VPNs that the authorities declare to be used for OTT services unless the consumer has paid their OTT tax,” the message adds.
SOCIAL MEDIA TAX
According to the directive from the telecom operators, payment for the social media tax will only be made using mobile money platforms or any electronic wallets upon which access will be granted.
The taxes will also attract the one per cent levy on mobile money, meaning you will pay a total of Ushs202 for OTT for one day. If you subscribe for one week, you will pay a total of Shs1,414, instead of Shs1,400, while those subscribing for the whole month will part with Ushs6,060
MTN says paying for the OTT tax has been separated from airtime because airtime has its own set of taxes and, therefore, paying using airtime would be double taxation.
“Airtime has its own set of tax (VAT and Excise) and in order to avoid unnecessary double taxation, you are required to pay your OTT tax only through mobile money,” MTN statement reads further.
Currently, Uganda has 13 million internet users, with 33 per cent of them accessing the facility through mobile connection. Government expects to generate between Shs400 billion and Shs1.4 trillion from the social media tax annually.
A joint message by Airtel, MTN and Africell indicates that the daily payment will run until midnight of that day. This means even if a customer subscribes at 11:50pm, the services will expire at midnight.
Mr Mutabazi has defended the decision, saying government will go by the chosen format of billing.
“The midnight deadline falls within the day and they are within the deadline. We are using calendar day and saying you cannot use social media through the day and night and, therefore, you will be billed until midnight, irrespective of the time you paid during the day or night,” he said.
Telecom operators will meet with UCC today to rollout the blocking of the VPN and iron out a few issues on the implementation of the new tax.
Parliament last month amended the Public Finance Act, slapping the social media tax.
The move followed a directive from President Museveni to the Finance ministry to widen the tax revenue base. The President said social media platforms such as WhatsApp, Facebook, Twitter, Skype and Viber were being used for propagating falsehoods and that for Ugandans to access the sites for what he called Lugambo, they should pay for them.
HOW VPN WORKS
VPN technology was developed to allow remote users and branch offices to securely access corporate applications and other resources. To ensure safety, data travels through secure tunnels and VPN users must use authentication methods, including passwords, tokens and other unique identification methods to gain access.