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China-Africa Trade Information Service
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China-Africa Trade Information Service
Photo from Daily Nation
It is reported that Kenya will approve the consumption tax on mobile currency transactions from 10% at the beginning of 2013 to 12% this year.
In addition, the tax on making phone calls and using Internet has also increased from 10% to 15%.
The transparency which comes with increased use of mobile money services such as Safaricom’s M-Pesa and broadband services in a steadily digitalising economy, they argue, can be used to track and trace transactions in the thriving informal sector.
Increased penetration of smartphones and use of mobile Internet is also seen as an enabler for the taxman to access information on businesses and persons in the jua kali sector for taxation purposes.
That may, in turn, slow down momentum in mobile money services which are rapidly evolving from person-to-person cash transfer platforms to an e-commerce tool, facilitating digital financial services such as instant loans and remittances by Kenyans abroad.
"You need to discourage people from actual physical currency and bring them to a space where you can be able to see them and one way of doing it is never to tax mobile money," Ndemo said last month.
"But the government taxes that same thing which will increase transparency in the darkest of the dark areas and be able to raise money from that space."
Treasury secretary Henry Rotich successfully sought National Assembly’s approval to raise excise duty on mobile money transactions from 10 percent introduced in early 2013, to 12 percent in Finance Act 2018 signed into law on September 21.
Tax on making a telephone call and using Internet has also been raised to 15 percent from 10 percent as Mr Rotich eyes about Sh20 billion from increased taxes on mobile telephony sector to partly fund the universal healthcare plan.
