Uganda first to introduce a Gossip Tax
The world has witnessed various weird taxes, such as the Russian tax on beards, the tax on Chinese immigrants into Canada, the English tax on fireplaces and windows. Uganda, a country in East Africa, decided to add a new tax to the world list of unusual taxes. More specifically, Uganda will tax 5 euro cents per day every user of apps, such as Facebook, WhatsApp, Twitter, and Viber. The tax, also known as a “gossip tax”, aims to disincentivize the use of social networking applications, thus reducing the negative consequences of gossiping in Uganda. The law introducing the new tax came into force on 1st of July 2018.
While Uganda aims to collect a few cents per day from every user of social networking applications, the EU has much higher ambitions. It is preparing to tax large tech companies, such as Google and Facebook, with a digital tax on EU turnover. According to the Financial Times, the rate of the tax is likely to be 3% of the EU turnover. A document leaked from the European Commission presents the following reason for the new tax: “The application of the current corporate tax rules to the digital economy has led to a misalignment between the place where the profits are taxed and the place where value is created.”
Australia has recently expressed plans which are in line with the EU proposals to tax major operators of social networks. In particular, the Australian Treasurer Scott Morrison stated in his budget speech that Australia may treat $7 billion in annual Australian sales recorded offshore by U.S.-owned media giants (e.g., Google, Facebook, Twitter, and Linked-In) as taxable income.
Interestingly, it is not clear what will happen if the operators of the major U.S. social networks refuse to pay the taxes due to non-U.S. jurisdictions. One of the possible answers is a complete ban on social networking companies who refuse to pay the applicable taxes. Such a ban will not be a new phenomenon. Many countries, not usually known for their strict enforcement of freedom of expression rights, have already blocked or censored major social networking applications. The list of such countries includes, but is not limited to, China and North Korea. It is worth mentioning that the government of Papua New Guinea has recently announced that it will ban Facebook for a month with the aim to crack down on fake users and examine the effects the social network is having on the population of the country.