Friday, June 19, 2009

Kenya Cuts VAT Tax on Mobile Phones

The cost of buying a mobile phone in Kenya has dropped sharply after
the government waived the import duty on mobile phones. Kenya's
Finance Minister Uhuru Kenyatta cut the 16% VAT on new phone handsets
in the government's budget statement - along with reducing import
duties on a whole range of other products.

"Let not anyone make it seem like it will not be done. It is in our
interest to do it, which is why we were lobbying. Nokia and its
partners are already implementing this," Nokia East and Southern
Africa Communications Manager, Dorothy Ooko told the Daily Nation
newspaper. "Gray products will no longer to be brought into our
country. The playing field is now level for all. The penetration rate
will double and the GDP will grow. It was a win-win for everyone," she

However, a 10% tax on airtime vouchers remains in place, so the cost
of calls and text messages themselves remain the same price.

The GSM Association has long called for a lowering of taxes on mobile
phone handsets and airtime, arguing that the lower costs boosts the
user base and hence leads to a net increase in revenue for

A recent report from the GSMA said that mobile subscribers across East
Africa are taxed at some of the highest levels world-wide. Kenya,
Uganda and Tanzania impose mobile-specific taxes which when added to
VAT can result in their respective consumers facing taxes as high as
30% in Uganda and Tanzania, and 27% in Kenya, considerably the highest
rates in Africa (and the among the highest across the world as a

No comments: