0.5 % levy on agent banking opposed by bankers
Members of the Uganda Bankers Association (UBA) and PricewaterhouseCoopers (PWC) leadership have requested that the Parliamentary Committee on Finance reject the government’s plan to impose a 0.5 percent fee on cash withdrawals made through agent banking.
The Ugandan banking community reasoned that the Excise Duty Amendment Bill, 2024, would obstruct government efforts to grow the country’s digital transactions and financial sector if it was approved in its current form.
The proposal in the excise duty ammendment bill 2024, according to presentations made by UBA Chairperson Wilbrod Humphreys Owor and PWC Partner Ms. Pamela Natamba, would hinder the expansion of financial digital services.
According to UBA, agents facilitate the expansion of financial institutions’ customer base by providing services to underserved or remote markets, many of which are unbanked and unexplored.
UBA Chairperson Owor highlights that these agent banking locations are crucial to the financial inclusion plan; as such, their income should be exempt from withholding taxes.
Awor believes that the said legislation would deter Ugandans from utilizing the financial services provided by agent banking.
“Agents are an extension of banks, the same way you look at an ATM (whereby) this one is a human ATM and the other one is a machine ATM. They are practically the same,” Mr Owor said.
He also tasked the House of Committe on Finance to present their opinion to the Ministry of Finance, the entity responsible for drafting the bill.
He emphasized the importance of advising URA and policymakers to consider not only short-term goals but also broader perspectives. There are aspects that require clarification, and we need to engage with the Central Bank and the Ministry of Finance to ensure they understand the larger significance.
