Stakeholders warn increased internet taxes could hinder tech growth

Stakeholders warn increased internet taxes could hinder tech growth

Stakeholders in Kenya’s technology space are meeting to assess the long term impact of some of the proposed taxes on internet services in the country.

Liquid Networks East and West Africa Chief Executive Officer, Adil Youssefi says that despite the push to raise revenue by the state some of the measures should be assessed on a long term basis.

Youssefi told The Star that there are discussions among the industry stakeholders to see how to balance the states short term revenue needs and the long term investment requirements.

“We believe that some taxes should be looked at with a long-term view. So deciding to tax internet services through excise duties or taxing wayleaves in the deployment of internet infrastructure will generate resources in the short term but will be detrimental in the long term,” said Youssefi.

Among the new changes in 2024, Kenyans will from July 1, be forced to dig deeper in their pockets to make phone calls and pay for internet.

This is following the National Treasury’s proposal to hike excise duty charged on telephone and internet data services from 15 per cent to 20 per cent.

By hiking taxes for calls and internet access, telecommunication companies could be forced to pass on the extra costs to Kenyans.

“Our belief is that we should prioritise the long term over the short term for the much needed investment required to make sure every part of Kenya has fiber connectivity,” added the CEO.

Despite Kenya being the most taxed country in terms of internet access, it has been leading in internet usage in East Africa according to research done by Statista.

This has been attributed to the rapid growth in e-commerce and social media usage in Kenya compared to Uganda and Tanzania.

Despite pressure from Organisation for Economic Co-operation and Development (OECD) global minimum tax initiative, Kenya has maintained its 1.5 per cent Digital Service Tax on tech giants like Amazon and Google.

Tech multinationals operating in Kenya will continue paying the 1.5 percent Digital Service Tax (DST) after the OECD exempted the East African country from signing the contentious global minimum tax (GMT) deal.

Liquid Intelligent technologies added that it has already operationalised its Kenya Ethiopia terrestrial route.

“It is live and gathering traffic, that route is critical to the resilience of the East Aafrica network. Ethiopia have only been enjoying internet from Djibouti and Somalia. Currently the fiber business contributes about 10 per cent of the groups revenues,” added Youssefi

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#Stakeholders #warn #increased #internet #taxes #hinder #tech #growth


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