Uhuru to Sign Into Law New Airtime, Loan Taxes

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    President Uhuru Kenyatta addresses WRC Safari rally drivers at KICC in Nairobi County
  • President Uhuru Kenyatta is set to sign into law new airtime and bank loan taxes posed to come into effect on Thursday, July 1.

    The report was tabled in Parliament by the Departmental Committee on Finance and National Planning and was excluded in the Finance Bill 2021. 

    The committee proposed to increase the rate of excise duty on telephone and internet data services from 15 percent to 20 percent.

    The rise in data costs will force telcos to raise the cost of their services. 

    Photo of a man using a phone in Nairobi
    A man pictured using a phone in Nairobi

    All other services done online such as servicing drivers' licences, land transfers, parking and licence fees will also rise. Kenya Revenue Authority will raise over Ksh8 billion from the new airtime taxes. 

    Banks were also denied the opportunity to exclude fees earned from 20 percent excise duty on loans. They will thus pay over Ksh7 billion as tax yearly. However, loan seekers will carry the burden as banks argued that they will raise the cost of loans. 

    In 2018, the government increased the excise duty from 10 per cent to 15 per cent on telephone and internet services in the Finance Act 2018. Telecommunication and internet providers increased the cost of the services to include the taxes.

    Telcos raised the cost of calls by 30 cents, and SMS by 10 cents. Internet and home fibre services also rose. 

    In the Finance Bill 2021, the Chairperson National Assembly Finance Committee, Gladys Wanga excluded some stringent proposals meant to weigh down taxpayers. 

    This included taxes on bread, motorcycle purchases, fish equipment and imported manufactured sugar confectionery. However, all Kenyans spend on airtime more than the mentioned commodities. 

    "I will not lower taxes. You will have to pay because there is no other way we can build facilities, roads, and schools. We must pay taxes.

    "The only thing we can do is making the remittance of taxes easier to avoid stalling business," Uhuru declared while speaking at the National Cargo Deconsolidation Centre in Nairobi, on Wednesday, February 10. 

    Times Towers in Nairobi which houses Kenya Revenue Authority’s head office. Thursday, February 20, 2020.
    Times Towers in Nairobi which houses Kenya Revenue Authority’s head office. Thursday, February 20, 2020
    Simon Kiragu