Kenya’s parliament proposed the postponement of the controversial 16% VAT on petroleum products for two years after a public outcry that the standards of living were becoming unbearable. The amended bill dubbed, Finance Bill 2018, was forwarded to the president, Uhuru Kenyatta, who was to either ascent to it or reject it.
In a twist, the president proposed the reduction of the petroleum VAT to 8% from the 16% but what was not revealed is that his proposals carried more than just amendments to the petroleum levy.
A closer look into the president’s proposals reveals that, if Parliament approves, Kenyans will have to dig deeper into their pockets for simple things such as communication, internet access and even sending money.
Telephone and Internet Data Services
The first kick comes in the form of increased excise duty on telephone and internet data services. “Telephone and internet data services shall be charged excise duty at a rate of fifteen percent of their excisable value,” reads the president’s proposal. Previously, excise duty on telephone services stood at 10% and this new proposal will see it bumped to 15%.
This 15% charge will also be applied to internet data services, which simply translates to the cost of internet access going up as well as the cost of making calls gaining weight.
Money Transfer Services
The second kick comes in the form of an increase on the levy charged for money transfer services. Uhuru Kenyatta proposes to raise excise duty on fees charged for money transfer services by cellular phone service providers, banks, money transfers agencies and other financial service providers from the current 12% to 20%. Treasury Cabinet Secretary, Henry Rotich, had raised this levy from the initial 10% to 12%.
This effectively increases the cost of money transfer by banks and all other money transfer service providers. President Kenyatta further proposes that excise duty on other fees charged by financial institutions shall be 20% of their excisable value up from 10%. Which means that it will cost Kenyans more to send money across all platforms, be in Bank or mobile money services such as M-Pesa.
Betting, Lotteries and Gaming
The only group that seems to have a relief from the President’s new proposals are betting firms. The president has proposed a reduction of their income tax from 35% to 15%. However, winners of these games and bets will have to endure a 20% tax on their winnings if the proposed bill is passed by parliament as is.