Proposed law to push up cost of mobile phones

By STANDARD REPORTER

Mobile phone manufacturers operating in Kenya say the cost of mobile phones will go up drastically unless the 16 per cent VAT is removed.

They want the National Assembly’s Committee on Finance, Planning and Trade to reconsider imposing the 16 per cent value added tax on mobile phones.

Productive workforce

The manufacturers who met on Saturday afternoon, argued that the best source of government revenue will come from a highly skilled and productive workforce, rather than taxing productivity inputs.

The inputs have been responsible for Kenya’s recent emergence as a hub for world class innovation on the mobile platform.

“Kenyan developers are recognised among some of the most innovative thinkers, tackling some of Africa’s biggest challenges through technology,” said the operators in a joint statement.

“We should empower and support these young people, not undermine their creativity with a tax.”

  The statement was signed by Huawei, Intel, Microsoft, Nokia, Samsung, GSMA and iHUB.  Kenya’s innovation hubs have given rise to a developer ecosystem of over 20,000 talented youth and IT professionals. The operators said the subscriber penetration in Kenya has outpaced other countries, including Nigeria, due to a progressive tax regime. 

Kenya’s mobile penetration now stands at 75 per cent and as December 2012, the country recorded 16.2 million Internet users, indicating huge room for growth.

This is because the VAT exemption on mobile devices in 2009 was supported by the Kenyan Government with the view to increasing subscriber penetration and driving down the cost of ownership.

The move was aimed at seeing more Kenyan’s could benefit from mobile technology.

Since the exemption, Kenya has experienced a 25 per cent increase in mobile penetration. The operators said the proposed amendment to the Value Added Tax Bill runs the risk of crippling the economic momentum.

This, they added will stall a nascent digital economy driven by young and highly skilled Kenyan information workers and innovators.