This archive report was first published on 1 July 2021.
Kenya: Airtime, Internet Cost to Rise As MPs Propose Higher Taxes ¶
On July 1, 2021, a parliamentary committee proposed amendments to the Finance Bill 2021 that will increase the cost of airtime and internet data services in Kenya.
The National Assembly's Finance and National Planning Committee, chaired by Homa Bay Woman Rep Gladys Wanga, suggested increasing the rate of excise duty from 15 per cent to 20 per cent on telephone and internet data services.
The proposal, which was not initially included in the Finance Bill, will see Kenyans expect an increase in internet fees in coming days if adopted as proposed.
The committee's decision comes as Kenyans are spending more time online, and it will be a sure revenue earner for the government in the short term as it struggles to find ways of paying for the Sh3.6 trillion budget.
Kenya seems to be following in the footsteps of its neighbours in taxing internet services to plug budget holes. Data is a quick cash cow for tax collectors given that most government services such as drivers' licences, land transfers and parking are now offered online.
However, the committee spared boda boda operators, infant flour and bread from new taxes, and also proposed to exempt from minimum tax any investor engaged in manufacturing and whose cumulative investment is at least Sh10 billion.
Additionally, the committee rejected new taxes on bread, flour and motorcycles, terming them essential products whose price increase would hit low-income earners hardest.
The committee also proposed to stop companies from deducting sea and air transport costs when computing income tax, which will see companies pay more taxes.
Furthermore, the Finance Bill 2021 seeks to amend several tax laws, among them the Income Tax Act, the Value Added Tax Act, the Excise Duty Act, the Tax Procedures Act, the Miscellaneous Fees and Levies Act, and the Capital Markets Act.
The amendments also include measures on regulatory reforms, revenue administration reforms and measures to strengthen macroeconomic stability.
It will also be painful for employers who fail to remit retirement dues to pension schemes. This is after the committee proposed to empower retirement benefit schemes to appoint the Kenya Revenue Authority (KRA) to collect the dues on their behalf.
