Mobile phone prices are set to go up this Friday after a new duty takes effect. The Finance Act 2022 imposed a 10 percent excise duty on imported cellular phones as well as a Sh50 excise duty on every imported SIM card.
The duties were introduced last month as an addition to the original Finance Bill 2022 submitted by Treasury Cabinet Secretary Ukur Yatani during the budget reading.
“Excise duty on importation of cellular phones shall be at 10 percent of the excisable value,” reads the Act which President Uhuru Kenyatta signed into law last week.
The duty on SIM cards was introduced by Kikuyu Member of Parliament Kimani Ichung’wah during a debate that saw last minute amendments added to the Bill.
According to Tax experts as quoted by the Business Daily, the measure is aimed ta increasing tax collections by the Kenya Revenue Authority.
“The Treasury and MPs have realized that mobile phones are a lifeline for everybody and there are more and more of us that are buying phones, and more and more will want to buy them in future,” Nikhil Hira, a partner at tax advisory firm Kody Africa LLP, said on telephone.
“I see it as a revenue-generating measure because of the number of people that want a mobile phone. It doesn’t make a lot of sense because we don’t have a local industry. I would understand if we had a mobile manufacturing industry because we would be trying to protect it.”
According to Mr. Hira, the cost of mobile gadgets will go up by 10 percent or more due to VAT applied as well.
“The price for the end consumer is going to go up not just by 10 percent but it will be more because there will be VAT on that as well.
“Of course, we don’t manufacture mobile phones or SIM cards here. So this 10 percent excise duty on imported phones would have made a lot of sense if we were manufacturing locally,” he said.
The tax on SIM cards means that registration and replacement of your line will now cost a little more. Normally, Safaricom charges Sh50 for the SIM card while Airtel and Telkom do not charge for new registrations.