The Communications Authority of Kenya has announced new measures targeted at mobile phone impoters, assemblers and retailers to boost tax revenues.
Effective January 1, 2025, local mobile device assemblers must upload the International Mobile Equipment Identity (IMEI) numbers of their assembled devices to a Kenya Revenue Authority portal to ensure these devices are tax-compliant.
The new regulations will affect all stakeholders involved in the assembly, importation, distribution, and connection of mobile devices to local networks.
Importers, similarly, will need to disclose the IMEI numbers in their import documents submitted to the KRA.
The regulator says this is necessary for registering devices in the National Master Database of Tax-Compliant Devices.
“To ensure integrity and tax compliance of the mobile devices in Kenya, the Authority hereby notifies all stakeholders, including mobile network operators, involved in the local assembly, importation, distribution as well as connection of mobile devices to local networks, that with effect from January 1, 2025, the following requirements will apply for all mobile phone devices in Kenya,” said CA in statement posted by government advisor Moses Kuria.
The new changes will see retailers and wholesalers become responsible for ensuring that all mobile devices they sell or distribute are tax compliant.
The CA will provide a system for verifying the tax compliance status of devices before purchase. Mobile network operators will only be permitted to connect compliant devices to their networks, as verified by a whitelist of devices provided by the Authority.
Non-compliant devices will be subject to grey-listing, giving their owners a set period to regularize them, or else face blacklisting.
“Operators will also be required to provide for the grey-listing of non-compliant devices to facilitate regularization within a prescribed period, failure to which the devices will thereafter be blacklisted,” read the statement.
“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.”
This will be the second swipe at taxing mobile devices after a similar attempt last year led to device shortages in the local market increasing the prices.
According to market findings, Taxes on consumers and mobile operators are directly affecting the affordability of mobile devices and services and reducing state revenues, a new report has shown.
The Mobile Tax Policy and Digital Development report by Groupe Speciale Mobile Association (GSMA) shows that taxes currently make up 21 per cent of the cost of a basic internet-enabled handset on average.
GSMA says that taxes such as the excise duty have in turn slowed the uptake of mobile devices and related services.
The report says that the excise duty levied on mobile services has shown a consistent upward trajectory, resulting in Kenya’s tax rates ranking among the highest in the Sub-Saharan African (SSA) region.
In Kenya, the excise duty on mobile services is one of the highest in Sub-Saharan Africa, having increased from 10 per cent to 15 per cent in 2018 and then from 15 per cent to 20 per cent in 2021.
The report revealed that these increases contributed to higher prices, decreased usage, and eventually
lower-than-expected revenues for
the government.