Telco service provider Safaricom will not be imposing tax charges on Data bundles bellow Sh100 but will be passing the tax cost on data purchased above the said amount.
‘’What we want to do on mobile data is basically, we want to pass on taxes on the higher bundles and leave the bundles bellow 100 the same.’’ Safaricom’s Acting Consumer Director Charles Kare said.
Adding that the financial heat expected as a result, will be the Telcos contribution to feeling the tax pain as the company cushions is customers from the additional tax.
According to Charles before the finance bill was read, Safaricom was paying on mobile 15 per cent VAT and 10 per cent exercise translating to Sh26 from every Sh100, while on the fibre business there was 15 per cent VAT and zero exercise translating to Sh150 in every Sh1000.
‘’The VAT remained at 16 per cent but the exercise went down to 15 per cent and basically because of the tax on tax, for every Sh100 the government is taking Sh33.4. So basically the taxes have moved from Sh26 to Sh33.4 on mobile, this is like 7.4 per cent increase on taxes. So for every Sh100 we are paying the government Sh7 extra on the mobile side of it.’’ Charles explained.
‘’On fibre as I said before was only 16 per cent VAT, while exercise has gone to 15 per cent so now fibre business and our mobile business is paying the same amount of tax and that’s why you can see in terms of the increased fibre moves from Sh150 to Sh310 if you take the 15 per cent increase. That’s why you can see what we did for voice is just to cover for this, ‘’ he added.
This follows news of the service provider increasing the price of voice calls and data by 30 cents and SMS by 10 cents respectively citing the excise duty tax.
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