Rich class prefer agency banking to mobile money , says URA2 min read
URA boss Doris Akol says fewer rich people using mobile money has cost her tax revenue
Uganda Revenue Authority has decried the shift of high value Ugandans from using mobile money services to agency banking, which has cost the country tax revenue.
Doris Akol, the URA Commissioner General said recently that the tax body could not collect at least Shs 30.5 billion in taxes after rich individuals switched to using agency banking.
There is currently no tax on withdrawals through bank agents, making them cheaper than mobile money.
Agency banking is a system where commercial banks use agents like petrol station, food kiosks, supermarkets, pharmacy, retail shops among others to collect money and/or help people withdraw their cash without going to the bank.
After government introduced a 0.5% tax on mobile money withdraws in 2018. In addition, with other taxes on mobile money, it has pushed some customers away from the system.
Akol said “… high-value clients withdraw their funds from agency banking.”
This has seen mobile money transactions value on MTN, the biggest network, drop by 36% since the introduction of the tax.
Other clients are adopting the use of mobile money for payment for services as opposed to withdrawing cash,” Akol said. However, the value of transactions still going through mobile money dwarf those done by bank agents by far.
According to Bank of Uganda, agents licensed stood at 8,104 as of June 2019. And in the six months to June 30, 2019, the value of transactions processed by the active agents amounted UGX 5.74 trillion.
For mobile money, the value of transactions was Shs 67tn in 2018/2019, a drop from Shs 73 trillion in 2017/18 financial year, the central bank says. BOU says mobile money grew in volume but the value of transactions dropped, pointing to URA’s claim that rich people are staying away from the platform.
Both mobile money and agency banking are platforms expected to bring the unbanked populations into the formal bankable structures.