Kenya's Safaricom opposes planned tax increase on mobile cash transfers
NAIROBI, June 18 (Reuters) - Kenya's biggest mobile phone
operator Safaricom is opposed to a proposed tax rise
on mobile phone based cash transfers that its chief finance
officer said on Monday would discourage the drive towards modern
In last week's budget speech, Finance Minister Henry Rotich
proposed increasing the excise duty on mobile transfers to 12
percent from 10 percent as part of broader measures to raise an
extra 27.5 billion shillings ($272 million) in state revenues.
"Increased excise duty on mobile money transfers will
negatively impact mobile led transfer services and payments and
slow down the government's drive towards a cash-light economy,"
Safaricom's CFO Sateesh Kamath said.
The government has been encouraging cashless payments to
improve security and reduce the risk of fraud.
Kamath said hiking duty on mobile payments would likely
mostly hurt the poor, most of whom do not have bank accounts and
rely on mobile transfer services like Safaricom's M-Pesa.
M-Pesa, Safaricom pioneered in 2007, now has more than 26
million users in the East African nation of 45 million, handling
billions of shillings in daily transfer volumes. The model has
been copied in other regional markets and beyond.
"It would be unfortunate to reverse the gains we have made
through mobile led financial inclusion in the past few years,"
Rotich justified the proposed tax increases, which also
included a new "Robin Hood" tax of 0.05 percent on bank
transfers of above 500,000 shillings, by saying they would be
used to fund free health care for all.
The tax proposals in the budget have to be debated and
adopted by parliament before they take effect.
($1 = 101.0000 Kenyan shillings)
(Reporting by Duncan Miriri
Editing by Edmund Blair)
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