Deliberations on the Finance Act, 2022, have been ongoing for a few months.
It covers a wide range of topics related to the taxation of goods and services, including those that are sold locally or internationally. The bill suggested that the adjustments made therein would take effect on July 1—today—after a thorough examination over the course of the whole month of April.
Now that the Act imposes a 10% extra tax (excise duty) on the importation of phones, customers, such as those who purchase phones, should be informed that they will have to pay more for the handhelds. Every imported SIM card is subject to an extra excise fee of KES 50.
Here are some statistics on SIM card and phone penetration in Kenya based on data provided by the CA to further explain this phenomenon.
In Kenya, there were 64.9 million active SIM subscriptions as of March 2022. This is a decrease from the 65.1 million subscriptions that were noted in the prior three months. However, these figures indicate that there is a 131.4 percent penetration of mobile devices.
In Kenya, there are 26.5 million smartphones and 33.6 million feature phones that are linked to mobile networks, respectively. This indicates that whereas feature phones have a penetration rate of 69.2 percent, smartphones have a penetration rate of 54.6 percent.
The new tax
It should be noted that the Finance Act of 2022 did not include the extra tax on the aforementioned gadgets. As MPs examined the measure in May, a fresh proposition was presented.
Additionally, the tax has been supported as a way for the government to increase income. The local phone manufacturing industries, which as of this writing do not exist locally, are not protected.
Since Kenyans only buy imported phones, the new tax will apply to any local phone purchases. Last but not least, Kenyans who want to change or register a SIM card will pay extra for the service (KES 50).