President Uhuru Proposes 60 Percent Increase in Tax Imposed on M-Pesa Cash Transactions

President Uhuru Kenyatta has proposed increased taxes on mobile cash transactions in his memorandum on the Finance Bill, 2018 sent to the National Assembly last week.

If Members of Parliament approve his proposals, the cost of sending money through mobile money services such as  M-Pesa will increase by 60 percent.

In the memorandum, Kenyatta wants tax imposed on M-Pesa transactions increased from the current 12 to 20 per cent. This comes just weeks after National Treasury Cabinet Secretary Henry Rotich increased tax on mobile money transfers from 10 to 12 per cent.

“Excise duty on fees charged for money transfer services by banks, money transfer agencies and other financial service providers shall be 20 per cent of their excisable value,” Kenyatta says in the memorandum.

The President further seeks to introduce a 15 per cent excise duty on telephone and internet data services. Kenyatta also suggests a 20 per cent excise duty on motor vehicles excluding locally assembled cars and public school buses.

He also wants employers to deduct 1.5 per cent of their employees' monthly salaries towards the National Housing Development Fund. The funds netted, he says, will go towards actualizing affordable housing, one of his "Big Four Agenda."

"The objective of the proposed scheme is to enable Kenyans to access affordable housing upon maturity of their individual schemes," the president proposes.

"Given that many Kenyans do not own a house, removal of this proposal from Employment Act adversely affects their dream of being house owners," he adds.

"For employees who qualify for affordable housing, the contributions accrue to the employee and shall be used to finance the purchase of a house under the scheme," Uhuru proposes.