The Communications Authority of Kenya (CA) will implement new regulations to boost tax revenue from mobile devices.
These measures, effective January 1, 2025, will impact various stakeholders in the mobile device ecosystem, including importers, assemblers, retailers, and mobile network operators.
Key Regulations
- IMEI Registration:
- Local device assemblers must upload IMEI numbers of assembled devices to a Kenya Revenue Authority (KRA) portal.
- Importers must disclose IMEI numbers in their import documents submitted to the KRA.
- These measures will ensure the registration of devices in the National Master Database of Tax-Compliant Devices.
- Retailer and Wholesaler Responsibility:
- Retailers and wholesalers must verify the tax compliance of devices before selling or distributing them.
- The CA will provide a system for verifying device compliance.
- Mobile Network Operator Restrictions:
- Mobile network operators will only be allowed to connect devices that are listed on a whitelist of tax-compliant devices.
- Non-compliant devices will be subjected to a greylisting period, after which they will be blacklisted.
“The new requirements will only apply to all devices imported or assembled in the country from November 1, 2024. All existing devices that will be on the Mobile Networks by 31 October 2024 will not be affected.”
Impact on Consumers and the Market
While these measures aim to increase tax revenue, they could also impact consumers and the market.
- Increased Device Costs: Taxes on mobile devices and services can lead to higher prices for consumers.
- Reduced Affordability: Higher prices may reduce the affordability of mobile devices and services, particularly for low-income individuals.
- Potential Market Disruptions: Previous attempts to impose similar measures have led to device shortages and price hikes.
The Mobile Tax Policy and Digital Development report by Groupe Speciale Mobile Association (GSMA) highlights the negative impact of high taxes on mobile services, including reduced usage and lower government revenue. It emphasizes the need for a balanced approach that promotes digital inclusion and economic growth.
The excise duty on mobile services in Kenya has increased over the years, making it one of the highest in Sub-Saharan Africa. In 2018, the duty rose from 10% to 15%, and then again in 2021, increasing to 20%.
