LEGISLATION

Cost of data, calls could go up if new tax amendment is passed

The increase in cost of the services will come as an increased burden to Kenyans who are still reeling from the economic effects of Covid-19

In Summary

• In a report tabled in parliament, a committee proposed to increase the rate of excise duty on telephone and data services from 15 per cent to 20 per cent.

• When the government increased the excise duty from 10 per cent to 15 per cent in 2018, telecommunication and internet providers increased cost of the services.

A mobile phone user on the street of Nairobi in 2010 /Philip Kamakya
A mobile phone user on the street of Nairobi in 2010 /Philip Kamakya

The cost of internet and calls could go higher if a proposed amendment in the Finance Bill 2021 to increase excise duty on the services is passed by July 1.

In a report tabled by the departmental committee on finance and national planning, the committee proposed to increase the rate of excise duty on telephone and internet data services from 15 per cent to 20 per cent.

This was not included in the Finance Bill 2021 presented by Ukur Yatani.

When the government increased the excise duty from 10 per cent to 15 per cent on telephone and internet services in the Finance Act 2018, telecommunication and internet providers increased the cost of the services to factor in the taxes.

Safaricom for instance raised the cost of calls by 30 cents, and SMS by 10 cents, the firm also increased the cost of their fibre services.

Wananachi owned, Zuku increased the cost of its 10mbps package to Sh3,999 from Sh3,500 while those who were paying for the Sh4,198 package had to part with Sh4,598.

The increase in the cost of calls and internet will come as an increased burden to Kenyans who are still reeling from the economic effects of Covid-19.

The two services are quite essential, therefore Kenyans will have to dig deeper into their pockets if the amendment is passed.

Latest sector statistics show that Safaricom holds the highest market share in mobile data subscription with 68.2 per cent, Airtel had 25.9 per cent while Telkom's share was 5.1 per cent

Jamii Telecommunications Limited and Equitel Ltd recorded the least market share at 0.4 per cent.

Safaricom also continued to dominate the fixed data subscriptions market taking 35.8 per cent of the market share with 255,594 subscribers.

The telco was followed by Wananchi Group at 30.3 per cent(216,219,) then Jamii telecommunications ltd at 19 per cent(135,602).

Safaricom increased its dominance in calls with a market share of 70.9 per cent or 13.8 billion minutes in the third quarter of 2021 from 69.2 per cent (13.5billion) in December last year.

Airtel’s market share for calls fell for the third consecutive quarter to 27.1 per cent or 5.3 billion minutes in the quarter ended March from 28.5 per cent (5.6 billion minutes) in December.

Telkom's share in calls also dropped in the third quarter from 2.2 per cent(428.4 million minutes) to 1.9 per cent(360.7million minutes).