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Heavy Taxes Could Kill Africa’s Budding Mobile Money Services

Heavy Taxes Could Kill Africa’s Budding Mobile Money Services

From IT News Africa

One sector continues to show growth in Africa and demonstrate the genuine potential the continent has to leapfrog global counterparts: mobile money services. Stakeholders, including mobile operators, have echoed the sentiment that the market is gaining traction and offers significant opportunity. However, recent media reports have highlighted one controversial aspect of the mobile money transfer market that continues to generate news headlines: taxation on mobile money services offered by network operators.

There have been numerous reports of the implementation of tax directives and related legislation by authorities in various countries – primarily within East and West Africa.

Kenya and Uganda are understood to be amongst the first to initiate tax on fees charged by operators to utilise mobile money services.  A report by the Economist held that Kenya and Uganda have turned to the telecommunications industry as a source of additional revenue to support planned increases in expenditure.

Tanzania is expected to follow suit and recently Zimbabwe added its name to a list of African countries to impose a tax.

In October 2013 domestic media reported that the Uganda Revenue Authority is to focus on the commission earned by mobile money agents in fulfilling transactions.

In January 2014 Zimbabwe made public the fact that it has imposed a $0.05 on each mobile money transaction, while Uganda has indicated it will impose a 10% tax on cash transfers by mobile phones and other money transfer operators.

A review of analysis from technology experts and industry analysts suggests that taxation could be problematic and many seem to favour this line of thinking.

Written by Chris Tredger | Read more at IT News Africa