Kenya Revenue Authority asks mobile handset manufacturers for proof tax breaks will grow industry

By MACHARIA KAMAU

The government has asked mobile handset manufacturers to produce data that shows imposing a levy on the devices would hurt mobile phone penetration in the country.

Speaking at a tax forum yesterday, Kenya Revenue Authority Commissioner-General John Njiraini challenged handset manufacturers to prove that the absence of value added tax on their devices would be largely beneficial to Kenyans by, for instance, improving their access to fairly priced devices or creating employment.

“Users end up spending more on airtime than they originally spent purchasing handsets, and airtime is subject to both VAT and excise tax … growth [in mobile phone penetration] has largely been due to a decline in the cost of airtime,” he said.

Mobile phone manufacturers a week ago argued that imposing 16 per cent VAT on their devices would drive up retail costs, which would further deepen the digital divide in the country.

Njiraini also asked other manufacturers seeking tax breaks to make their submissions based on rigorous research rather than “unsubstantiated claims”.

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