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Taxation, gender, and internet access: lessons from Uganda

5 min


Rehema Kahunde

A country’s system of taxation can have differential effects on men and women. This column looks at the experience of Uganda, where a recently introduced tax on use of the internet threatens to limit women’s access to services, information, and business opportunities. This  article calls for analysis of the potential impact of any proposed tax changes on gender equality to be central to public policy discussions.

Ugandan women are disproportionately affected by the 12% excise tax on internet bundles relative to their male counterparts. Under the Excise Duty Amendment Bill 2021, the government of Uganda introduced a 12% levy on data packages as a replacement for the UGX 200 daily over-the-top (OTT) tax that was evaded by internet users through the use of virtual private networks (VPNs). This is in addition to the 18% value added tax, raising the total tax on internet use to 30%. This makes internet access the most with the Uganda Communication Commission putting the cost of one gigabyte of internet at $2.67 relative to $2.41, $2.18 and $2.18 for Kenya, Tanzania and Rwanda.

While the internet tax is in line with the government’s efforts to increase domestic revenue mobilization, it is likely to have negative and long-term economic and social impacts. Expensive internet could be an obstacle to the importance attached to its access such as deterring government plans of easing service delivery through the use of tele-education, tele-medicine and e-government as laid out in the third National Development Plan. More importantly, potential and existing links between the internet tax and its implications for gender equality in terms of women’s access to digital services have largely been ignored. While women and men are typically taxed under the same rules, the internet tax is likely to have differential impacts on women versus men.

First, the tax is likely to exacerbate the already stunted access to digital technologies by women in Uganda. In 2021, the Uganda Bureau of Statistics (UBOS) revealed that the proportion of household members that used the internet was lower for women (5%) relative to men (8%). It is worth noting that affordability issues were highlighted among the main reasons for the low internet access. The internet tax is an extra cost on usage, and this is likely to thwart current efforts to increase women’s digital inclusion.

The tax makes use of the internet less affordable for women compared with men, given that the average monthly income of the later (UGX 220,000) is twice that of the former. This implies that an additional charge on the cost of the internet is likely to deepen the existing gender digital divide in Uganda. It further implies that women risk being left behind as different societies and economies digitize.

Limited access to the internet for women deprives them of the enormous advantages that come with going digital. For example, analysis by the Alliance for Financial Inclusion confirms that digitalization has the potential to increase income-generating capacity, manage risks, lower transaction costs, and promote a saving culture. It is thus not surprising that gender differences have been observed in some of the above indicators, especially income.

Additionally, making the internet less affordable limits women’s access to information, services, and social connectivity. With limited internet use, more women are deprived of the relevant skills that can enable them to participate in the labor market. For example, several women have acquired skills through watching YouTube videos, and social networking on different social media groups. 

Given that the majority of micro, small and medium-sized enterprises (MSMEs) in Uganda are owned by women, the internet tax implies an increase in the cost of operation as most of their businesses depend entirely on the internet to connect to customers, suppliers, providers of credit, and important services such as business registration.

For example, the high cost of internet access limits the ability to conduct digital advertising. This hinders businesses’ presence on the web, thus reducing their ability to reach millions of potential customers. As such, insufficient access to internet implies a low clientele hence low demand, which could drive more women out of business.

Additionally, expensive internet access makes it difficult for a business to conduct research on new product ideas, new methods of creating products, and pricing information. This results in low value addition, as evidenced by Uganda’s main exports (agricultural produce), low prices, and consequently low earnings for such entrepreneurs.

Furthermore, an extra cost on internet reduces women’s ability to use mobile transactions such as mobile payments. A recent study reports that Ugandan women are 30% less likely to use digital financial transactions than men. This implies that an additional cost would have even the few women who are digitized leaving the digital space.

Yet women benefit more from digital payments than men given the nature of work and societal norms that have resulted into having women work from or near their homes. For example, digital payments prevent women from travelling to distant suppliers, clients, and bank branches. As such, the internet tax reduces the options available for women to juggle their family responsibilities and their businesses through digital transactions.

Similarly, digital payments enable women entrepreneurs to gain control over their earnings as they ensure privacy. This also enables women to make their own decisions about their incomes, which benefits their entire families through investment in nutrition and child health. An extra cost for internet access deprives women of such advantages that come with internet use, hence affecting every household member.

In conclusion, mainstreaming a gender equality perspective into general tax policy analysis can significantly improve the quality of public policy. Interventions to increase women’s access to internet should be given priority in national policy strategies such as the current draft of the National Financial Inclusion Strategy (NFIS) 2023-28 in order to counter the negative effects of the internet tax on women.


Rehema Kahunde
Research Analyst, Economic Policy Research Centre (EPRC)