Safaricom is reviewing the prices of calls, data (both its cellular plans as well as fibre), SMS and M-Pesa following the coming into effect of the Finance Act 2023.
The implementation of Finance Act 2023, which outlines the various ways in which the government will raise revenue and spend it for the next 12 months starting July 1st 2023, had been held by the courts for almost a month since its expected effective date. That changed yesterday when the courts allowed its enactment.
In effect, that meant that most of the proposals contained in the then Finance Bill 2023, which generated quite a lot of debate and uproar among Kenyans before it was passed by Parliament and assented into law by the President and became Finance Act 2023, were now in force.
Among the changes brought about by the new law are the increase of the tax charged on mobile money transfer fees from 12% to 15% as well as a similar decrease in the same tax that’s levied on telecommunication services i.e. calls, SMS and data (both cellular plans and fibre) from 20% to 15%.
The reduction of the excise duty on telecommunication services is likely a response to the cold reception by Kenyans to its previous hike in 2021, which saw it go from 15% to 20% and resulted in corresponding price increases by mobile network operators and internet service providers. Subsequently, it has been reported, Kenyans reacted by making fewer phone calls and sending fewer text messages. As a result, instead of the taxman collecting 22% more revenues as intended when the tax rates were hiked, tax collections actually decreased by 20%.
We will be fleshing out the exact price increases and reductions in the various products and services on offer by telecommunication companies such as Safaricom in upcoming articles.
