Ugandans will continue to pay the 0.5 percent excise duty on mobile money cash withdrawals after the Ministry of Finance declined to reduce or restructure the tax in the 2026/2027 financial year.

The decision comes despite strong appeals from mobile money operators and civil society groups, who argue that the tax has made digital transactions expensive and is slowing the shift toward a cashless economy.

Mobile money service providers, including MTN and Airtel, had proposed halving the tax to 0.25 percent and spreading it across the entire ecosystem — with banks and mobile money platforms each bearing half — to create fairness and reduce the overall cost of moving money from bank accounts to mobile wallets and then to cash.

Currently, transferring money from a bank to a mobile wallet attracts bank charges plus a 15% excise duty on the fee.

Withdrawing the same money via an agent or ATM then incurs the additional 0.5% tax on the full amount withdrawn, making the end-to-end cost significantly higher than pure bank-to-bank transfers.

Richard Yego, former MTN MoMo Managing Director, said the current structure penalises users who rely on mobile wallets as a bridge between banking and daily spending.

Civil Society Budget Advocacy Group (CSBAG) Executive Director Julius Mukunda criticised the tax regime, noting that withdrawing Shs1 million at a bank counter or ATM costs only Shs315 in tax, while the same amount via mobile money can cost over Shs6,630.

He warned that high taxes are pushing people back to carrying cash, undermining financial inclusion.

Despite earlier indications in the 2026/27 Revenue Enhancement Measures that the government was considering cutting the duty to 0.25%, the proposal was dropped.

Permanent Secretary and Secretary to the Treasury Ramathan Ggoobi confirmed that reducing the tax is not part of the revenue measures for the next financial year.

He said the government will instead undertake further analysis on how to gradually incentivise a shift from cash to more transparent digital channels.

MTN Uganda reported strong growth in its mobile money business in 2025, with active subscribers rising 6.5% to 14.7 million and transaction value increasing 23% to Shs195.5 trillion.

However, industry players maintain that the withdrawal tax continues to suppress transaction volumes, especially among small users.

The Ministry of Finance has maintained that the tax remains necessary for revenue generation, even as critics argue it is counterproductive to the country’s financial inclusion goals.