Kenya to start taxing mobile transactions

The Kenyan government has announced plans to implement at 10% tax on mobile money payments, including those made via MPesa.

According to The Next Web, the tax is part of a plan to cover the nearly US$300-million needed for pay rises after a recent strike by state-employed teachers, lecturers and doctors.

There are around 17-million registered MPesa accounts, handling over two-million transactions a day. Although most of the amounts being moved are relatively small, sheer volume should mean that the government gets some decent revenue from the tax.

As The Next Web notes however, it doesn’t look like the mobile operators were kept in the loop with the new tax. The finance ministry’s announcement reportedly comes just a day after Airtel announced that it would be removing transfer costs on its mobile money services. This would effectively allow people to send money via mobile without any fees, and was seen as an attempt to move them away from MPesa (and presumably keep them from using services offered by the country’s banks).

By the looks of things, the Kenyan government expects the operators to shoulder the extra costs of the taxes without passing them on to their customers.

That’s going to hurt MPesa in particular, which saw solid growth in the amount of money transferred in the first half of 2012, despite slowing growth in its user base.



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