The Finance Act of 2018 introduced excise duty on some key services. One of the duties was levied on telephone and internet services at 15 percent.
A new amendment seeks to change that tax to 20 percent, and is said to go live starting July 1.
The proposal suggests the deletion of the expression ‘the rate of fifteen percent’ and inserting the following expression ‘rate of twenty percent.’
The development is especially critical because the majority of Kenyans use their phones widely for internet access and communication (calls and SMS).
In the same breath, the state has also seen mobile services evolve; people use their devices to access services such as drivers’ license applications, land transfers, paying for parking, and other licensing platforms, to mention a few.
Once the president signs the amendment, Kenyans will start paying more for the said services.
The outcome is that developments, such as the growth of mobile phone and internet penetration that has been on the upward trend (according to the CA) will likely be affected.
Internet penetration, specifically, has been at the forefront in driving innovation surrounding mobile phone services and products for the self-employed.
It also goes without saying that an increase in the cost of airtime will affect millions of Kenyans.
It should be remembered that when the original Finance Bill 2018 went into effect, services such as Home Fibre received a price bump. For instance, users were compelled to pay an additional KES 1000 for a mid-tier connection. Calling fees also went up.
Kenya has near 41 million mobile data subscriptions. That demographic is lucrative as the government actively seeks to identify services it can tax to expand its earnings at a time when Kenyans are struggling to make ends meet.
