The government of Uganda through the Ministry of Finance, is considering the possibility of introducing a tax on bank cash withdrawals.
The new taxation measure that would affect all persons who utilise the banking sector is in the offing.
According to Patrick Ocailip, the deputy secretary to the treasury in the Ministry of Finance, currently Mobile Money withdrawals are subject to 0.5% excise duty but on the counter, agency banking and ATM withdrawals in commercial banks are not subjected to the same tax.
Mr Ocailip noted that in case the tax becomes operational, it would encourage cashless transactions, promote e-commerce, improve tax compliance in addition to raising revenue.
“Following our budget consultative meeting held on February 5, 2021 Ministry, attended by officials from Uganda Communications Commission, Uganda Revenue Authority, Telecom Operators and Bank of Uganda, it was proposed that we explore taxation of cash withdrawals from commercial banks. Currently, Mobile Money withdrawals are subject to 0.5% excise duty but on the counter, agency banking and ATM withdrawals in commercial banks are not subjected to the same tax. It is note-worthy that this would encourage cashless transactions,promote e-commerce, improve tax compliance in addition to raising revenue,” Ocailap said in a letter dated February 9.
“We, therefore, wish to seek your opinion on the proposal and also request you to avail us with data on all categories of withdrawals for our further review and determination. We require tis date for the past three financial years.”
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