A new amendment in Kenya’s Finance Act of 2018 sought to change taxing on telephone and internet services from 15% to 20%. The change is set to go live today, 1 July.
The amendment has seen criticism in the country since its first announcement because a large majority of Kenyans use their phones for both internet access and communication via SMS and calls. The country has also seen the recent adoption of many new services on mobile devices.
New mobile services such as applying for a driver’s license, land transfers, paying for parking, and other licensing platforms, are but a few that will see increased taxation through usage.
Techweez believes that the increased taxes will negatively affect the growth of mobile phones and internet penetration that has been on the upward trend in the country. Millions of Kenyan users will also be affected by the increases in airtime and data costs.
Kenya is famous for its highly connected population, with nearly 41-million mobile data subscriptions. A 2020 study revealed that Kenyans spend most of their income on airtime already.
This massive demographic is obviously very lucrative, with the Finance Bill amendments seen as the government actively seeking to identify services it can tax to expand its earnings at a time when many Kenyans are struggling to make ends meet due to the COVID-19 pandemic negatively affecting the country.
Kenya’s Fourth Wave May Be “Catastrophic”
The highly contagious COVID-19 Delta variant that is currently causing a massive third wave of infections in South Africa may cause the fourth wave of infections in Kenya over the next two months. This is according to Kenya’s Health Ministry.
“If there’s a fourth wave in July-August, it will most likely be due to delta,” said Patrick Amoth, the acting director-general for Health at the ministry.
Amoth continued to say that restrictions were being imposed in order to “avoid a catastrophic fourth wave.”