Ugandans will have to cough up 200 Ugandan shillings ($0.05) a day to use popular platforms like Twitter, Facebook and WhatsApp.
Parliamentary spokesman Chris Obore defended the law which comes into effect July 1, saying that as more Ugandans use social media it should become an important source of revenue for the country.
"The government is trying not to over rely on donor funding. It is just a redistributive tax as the government is out to look for money from those who have to finance projects," Obore told CNN.
He added: "The tax is very small. 200 shillings (50 cents) in Uganda to a dollar is very negligible. People in Uganda will not find it too expensive."
However, many Ugandans on social media see the tax as a government crackdown on free speech.
This story has been updated to remove a quote and tweet incorrectly attributed to President Museveni.