Experts Push for Mobile Money Tax Reform as Users Shift to Alternative Banking Channels

Kampala, June 2, 2026 - Financial experts have called for reforms to Uganda’s digital payments tax system, proposing a reduction in the mobile money withdrawal tax from 0.5 percent to 0.25 percent amid growing signs that consumers are shifting to mobile and agency banking services to reduce transaction costs.

The proposal comes as mobile money continues to dominate Uganda’s digital payments ecosystem, with active accounts reaching 33.7 million by 2025 and annual transaction values nearing Shs195 trillion. The platform remains central to financial inclusion and everyday commerce, particularly for low-value, high-frequency transactions commonly used by households, small businesses, and informal sector operators.

Industry figures indicate that mobile money continues to play a critical role in Uganda’s economy, with millions of users relying on the service for daily financial transactions. However, experts argue that rising transaction costs, particularly withdrawal taxes, are increasingly influencing consumer behaviour.

Analysts say many users are gradually turning to agency banking and mobile banking platforms, which often offer lower transaction costs for similar services. Recent industry data shows agency banking transaction values increased significantly between 2024 and 2025, accompanied by substantial growth in transaction volumes and the number of registered agents across the country.

Experts argue that the trend reflects a broader structural shift in digital finance, with consumers increasingly opting for cheaper alternatives to avoid the cumulative impact of repeated withdrawal charges.

They further contend that Uganda’s current tax structure creates an uneven playing field because mobile money withdrawals attract higher taxation than comparable banking transactions, potentially distorting competition within the digital payments sector.

Tax specialists have also noted that Uganda imposes a comparatively heavier tax burden on mobile money withdrawals than several neighbouring East African countries, where excise duties are generally applied without additional withdrawal taxes.

While acknowledging the need for domestic revenue mobilisation, experts warn that excessive taxation could discourage the use of digital financial services and slow progress toward broader financial inclusion.