Airtime excise obligation is creating a depressing temper throughout the EA area

By Albert Mwazighe

Businesses and individuals in the region will face higher airtime and internet data costs as governments enforce the new excise tax rates set in their respective 2021-22 budgets.

In Kenya, the government increased the excise tax on airtime and telephone services from 15 to 20 percent. Airtel Kenya was the first telecommunications company to announce to its customers that it would increase telephone charges in order to adapt to the new excise tax.

“Dear customer, due to an increase in excise duties from 15 percent to 20 percent, Airtel will increase its voice tariff to Ksh2 plus tax, which equates to 2.78 Ksh per minute,” said Prasanta Das Sarma, Managing Director of Airtel Kenya.

Safaricom followed suit, announcing that prepaid customers would now pay Ksh 4.87 per minute for peak hours calls and Ksh 2.50 per minute for off-peak calls, an increase of Ksh 4.3 per minute from earlier Payment was made during rush hour and Ksh2.20 per minute outside of rush hour.

The telecommunications company announced that the cost of sending an SMS over their network will also increase to 1.20 Ksh per message, while the cost of buying bundled data will increase to 4.87 Ksh per MB.

“All voice calls, data and SMS outside the bundle, as well as integrated tariffs including all-in-one, will be revised to reflect the increased consumption tax,” said a message from Safaricom to its customers.


Target for mobile money

High excise tax rates in the region have increased roaming charges, driving up business costs.

Safaricom customers are also having to pay more for credit services like Fuliza and Mshwari, which have helped users get through the tough times caused by Covid.

In Uganda, the Ministry of Finance has increased the consumption tax on airtime and internet data to 12 percent. In addition, telecommunications companies in Uganda pay 18 percent VAT on airtime, which brings the total tax to 30 percent.

MTN, the most important mobile operator in Uganda, charges Ush4 per second for calls, Ush60 for SMS to MTN networks and Ush90 for other networks and Ush0.5 per KB mobile Internet.

In Rwanda, the government is under pressure to increase the excise tax by 10 percent as this would undermine efforts to keep cell phones and the Internet in use, which is still very limited. The main network operator MTN charges Rwf12 per SMS to other MTN networks, Rwf26 to networks other than MTN and Rwf4 per minute for local calls.

The consumption tax on transmission time in Tanzania is 17 percent, while mobile services such as calls, SMS and data are subject to 18 percent VAT.

Calls in the Vodacom network, the most important mobile operator in Tanzania, cost 0.67 Tsh per second, local SMS are billed at 20 Tsh per message and data packets cost 0.0078 Tsh per KB.

High excise tax rates in the region have increased roaming charges and increased business costs.