June 18, 2018

Summary

Increased excise duty on mobile money transfers will negatively impact mobile-led transfer services and payments

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Safaricom – Increased Tax on Mobile Money Transactions Bad for the Sector

Safaricom – Increased Tax on Mobile Money Transactions Bad for the Sector

Safaricom has faulted the increased tax on mobile money transactions, saying it will hurt the sector.

According to Sateesh Kamath Chief Financial Officer Safaricom, the increased taxes will have a negative impact on money mobile transfer services as well as affect the unbanked population, who rely on mobile money for their financial transactions.

“Our view is that increased excise duty on mobile money transfers will negatively impact mobile-led transfer services and payments and slow down the Government’s drive towards a cash-lite economy.

“This could also negatively impact the least able in our society, who are largely unbanked and who rely on mobile transfer services such as M-Pesa, He said”.

Treasury CS Henry Rotich, in the recently unveiled Budget 2018, increased excise duty on mobile money transactions to 12 per cent, up from 10 per cent, which will see Sh12 of every Sh100 charged for the transactions go to taxes.

“I have increased excise duty fees charged on money transfer services by cellular phone service providers from 10 per cent to 12 per cent. The revenue realized from these measures shall be used to fund Universal Health care,” Rotich said.

In an article titled; KILLING THE GOOSE: ROTICH’S MPESA TAX HIKE IS FOOLISH, the Kenya Forum condemned the tax increment saying it was an unnecessary burden to the already tax burdened mwananchi.

“By increasing excise duty on mobile financial transactions CS Henry Rotich is further taxing already taxed income and damaging a system that has worked to the universal benefits of Kenyans. It will be the ordinary Kenyans who will pay the price in more ways than one for Rotich’s folly,” The article by KF reads in part.

Kenyans transacted Sh3.7 trillion through their mobile phones in the 12 months to March 2018.

Poor households that rely on kerosene for cooking and lighting will also feel the impact of a rising cost of living after Rotich increased excise duty on kerosene to Sh10.31 from Sh7.21 per litre to match that of diesel.

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