Excise duty on airtime rings up gloom across EA region

Thursday July 15 2021
Mobile money

Rwanda has continued to record growth in e-payments since the introduction of mobile money transactions. PHOTO | FILE | NMG

By Albert Mwazighe

Businesses and individuals within the region will have to grapple with higher costs of airtime and internet data, as governments move to enforce the new excise duty rates outlined in their respective 2021/22 financial year budgets.

In Kenya, the government increased excise duty on airtime and telephone services from 15 percent to 20 percent. Airtel Kenya was the first telco to notify its customers that it would be increasing call rates to align with the new excise duty.

“Dear customer, due to an increase in Excised Duty from 15 percent to 20 percent, Airtel will increase its headline voice tariff to Ksh2 plus taxes which will equate to Ksh2.78 per minute,” said Airtel Kenya Managing Director Prasanta Das Sarma.

Safaricom followed suit, and announced that customers on the prepaid tariff would now be paying Ksh4.87 per minute for calls made during peak hours and Ksh2.50 for calls made during off-peak hours, an increase from Ksh4.3 per minute paid previously during peak hours and Ksh2.20 per minute during off-peak hours.

The telco announced that the cost of sending an SMS via their network will also increase to Ksh1.20 per message, while that of purchasing out of bundle data will increase to Ksh4.87 per MB.

“All out-of-bundle voice calls, data and SMS, as well as integrated plans including All-In-One will be revised to reflect the increased Excise Duty,” read a notice from Safaricom to its customers.


Mobile money target

High excise duty rates within the region have resulted in an increase in roaming fees, pushing up the cost of doing business.. An internet package which went for Ksh2,900 for instance will now go for Ksh3,000, which is an increase of Ksh100.

Safaricom customers will also have to pay more for loan services such as Fuliza and Mshwari, which have been instrumental in helping users get through tough times occasioned by Covid.

In Uganda, the ministry of Finance increased the excise duty on airtime as well as internet data to 12 percent. Additionally, telecom companies in Uganda pay a VAT of 18 percent for airtime, bringing the total tax to 30 percent.

MTN, the main mobile service provider in Uganda, charges Ush4 per second for calls, Ush60 for SMS to MTN networks and Ush90 to other networks, and Ush0.5 per KB of mobile internet.

In Rwanda, the government has been under pressure as to whether to increase excise duty which stands at 10 percent, as this would frustrate efforts made in mobile and internet penetration, which is still very low. The main network provider, MTN, charges Rwf12 per SMS to other MTN networks, Rwf26 to networks other than MTN, and Rwf4 per minute for calls made locally.

Excise on airtime in Tanzania is at 17 percent, in addition to which mobile services such as calls, SMS and data are subjected to 18 percent VAT.

Calls on the Vodacom network, the main mobile service provider in Tanzania, will cost you Tsh0.67 per second, local SMS are billed at Tsh20 per message and data bundles go for Tsh0.0078 per KB.

High excise duty rates within the region have resulted in an increase in roaming fees, pushing up the cost of doing business.