Mobile phone devices are set to increase in cost by at least 35 percent after the government increased levies. Dealers are wary of the emergence of a black market as they will apply a new 25 percent import duty and 10 percent excise tax.
According to Samsung Director Mobile Experience Charles Kimari, the Kenya Revenue Authority has increased the number of levies on phone imports by up to 41 percent including import duty, value-added taxes and a raft of port clearance charges.
“The price increase will definitely affect demand, but will also encourage parallel imports for gadgets that are not for this market but will be cheaper without the higher taxes,” Mr Kimari said, according to the Business Daily.
All taxes on imported computer parts and accessories had been scrapped under President Kibaki’s regime. Due to an increase in mobile connectivity, Kenya has grown to digital hub, with several tech giants competing for the lucrative market. The addition of the new taxes might however hurt the thriving market with higher chances of unscrupulous dealers reviving a black market.
For instance, the cost of an S22, one of Samsung’s premium smartphones, jumped from Sh150,000 to Sh185,000, while the cost of an iPhone Promax increased from Sh225,000 to Sh235,000.
According to Tax experts as quoted by the Business Daily, the measure is aimed at 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.”