The era of cheaper phones and SIM cards ends today, as a new tax imposed on handsets and other mobile services accessories comes into effect from mid night. The Finance Act 2022, whose provisions become effective on 1st July, has imposed a 10% excise duty on the importation of cellular phones in addition to Ksh50 excise duty on every imported ready-to-use SIM card.

The two new taxes on handsets and SIM cards were introduced during the debate by the House last month after Treasury Cabinet Secretary Ukur Yatani submitted the original Finance Bill 2022. Duty on SIM cards was proposed by Kikuyu legislator Kimani Ichung’wah in last-minute amendments to the Bill.

According to the Act, which President Uhuru Kenyatta signed into last week, excise duty on importation of cellular phones shall be at 10% of the excisable value.

The tax is seen more as a move to raise more revenues for government than to protect a non-existent local industry as all mobile gadgets are imported from Europe, US and Asian manufacturers. The new taxes are expected to hit Kenyans hard especially the lower end of the market which is being courted by smart phone markets.

As of March 2022, there were 64.9 million active SIM subscriptions in Kenya. This is a drop from 65.1 million subscriptions that were recorded in the previous quarters, according to Communications Authority. This numbers, nonetheless, mean that mobile penetration is at 131.4 percent. The number of smartphones and feature phones connected to mobile networks in Kenya is 26.5 million and 33.6 million, respectively.

This means that the penetration rate of smartphones is at 54.6%, whereas that of feature phones is at 69.2%.

Data from the Communications Authority of Kenya shows some 540,000 new mobile phones were activated three months to March 2022 most of them basic feature phones. This brought the number of mobile phones in March to 60.1 million from 59.56 million last December.

Active mobile (SIM) subscriptions, on the other hand, fell by 200,000 in the three-month period through March 31 to 64.9 million, reflecting the impact of the push to have users update registration details with a cap of two lines per user.

By Business today

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