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Kenyatta slaps tax on internet and money transfer charges

Kenya: Uhuru slaps tax on internet and money transfer charges

Mobile money and internet users in Kenya will pay 15% excise tax on internet services and 20% on mobile money transfers after parliament passed the Finance Bill 2018.

The Bill was introduced three months after the official budget was announced and designed to tackle deficits.

In a memorandum sent to parliament on Friday last week, President Uhuru Kenyatta recommended taxes on internet and mobile money transfer services.

The memorandum read: "Telephone and internet data services shall be charged excise duty at a rate of fifteen percent of their excisable value. Excise duty on fees charged for money transfer services by banks, money transfer agencies and other financial service providers shall be twenty percent of their excisable value."

"Excise duty on other fees charged by financial institutions shall be twenty percent of their excisable value," Uhuru said, adding more charges to bank transactions. The fee has until now been 10%.

The 2018/19 budget had proposed to raise the excise tax on mobile money transfer to 12% from 10%, but it has now been increased.

The President did not state how much revenue the new taxes on mobile money and internet will accrue. However, a section of MPs have vowed to challenge the new law in court.

As part of a series of cost-cutting measure affecting government operations, the budget allocated to the Digital Literacy Programme (DLP) has been slashed by Kshs 5.5 billion (US$ 55 million). It was initially put at Kshs 11.9 billion (US$ 119 million) for the current fiscal year.

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