Safaricom Opposes Gov't Plan to Increase Tax on Mobile Cash Transfer to 12 Percent

Kenya telecommunication giant Safaricom has opposed tax increase on mobile money transfer proposed by Treasury Cabinet Secretary Henry Rotich.

While reading 2018/2019 budget statement in Parliament last Thursday, Rotich proposed to increase excise duty on mobile cash transfer services from 10% to 12%.

He also proposed a tax of 0.05 % on cash transfers of over Sh 500,000 between banks and other financial institutions.

“Our economy has a well established financial sector in the region with significant sums of money transferred monthly. In order for the government to get a fair share of revenue from these financial activities and to finance critical government programmes.

"I propose to introduce a robin hood tax of 0.05% of any amount of ksh500,00 or more transferred through banks and other financial institutions,” said Rotich. “The revenue realised from these measures shall be used to fund universal healthcare.”

However in a statement on Monday, Safaricom Chief Finance Officer (CFO) Sateesh Kamath said the increased taxation risk reversing the gains made in the sector.

“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.

Kamath said the move will also hurt ordinary and poor Kenyans, who don't own bank accounts and only rely on mobile cash services such as Mpesa.

“It would be unfortunate to reverse the gains we have made through mobile led financial inclusion in the past few years,” Kamath said.