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Kenya set to debate mobile tax increase proposals

Kenya set to debate mobile tax increase proposals

The president of Kenya, Uhuru Kenyatta, has detailed the country’s proposals for increasing taxes on telecom and mobile money services.

The government is keen to raise revenues to fund initiatives in areas such as housing and healthcare without squeezing lower income citizens, but the proposals would likely result in operators increasing their prices.

The proposals recommend increasing excise duty for airtime and data services from 10% to 15%, and pushing up the tax on mobile money transfers from 10% to 12%. Additionally, Kenyatta has called for a 20% excise duty on the fees that financial institutions and services charge on every completed transaction.

The proposals will be voted on today by Kenya’s parliament. They have been met with opposition from operators, with market leader Safaricom railing against any tax increases on mobile money transfers back in June.

Safaricom’s CFO Sateesh Kamath argued that any tax hike would be a particular blow to the country’s unbanked (and therefore very low income) population, as well as being an impediment to Kenya’s goal of reducing societal dependence on cash.

Mobile money has seen stellar success in Kenya, with the country regarded as a paradigm for African markets keen to expand financial inclusion. Safaricom’s m-Pesa is the country’s most widely use mobile money offering.

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