October 9, 2012

Kenya Set to Start Taxing Mobile Money Transactions

2009-05-07-mpesa.jpeg Following the recent strike in Kenya by state-employed teachers, lecturers and doctors, the country’s treasury has said it will cover the approximated $300 million USD cost in wage increases through cost cutting and introduction of new taxes, including on mobile money transfer services such as Safaricom’s M-Pesa. The Next Web reports.

quotemarksright.jpgThe tax measures announced by the finance minister Robinson Githae will include a 10 percent excise duty on cash transactions using popular mobile money transfer systems.

M-Pesa is the largest mobile money transfer service provider in Kenya, with more than 14 million subscribers. The mobile money service has proved to be a crucial service for revenue growth for the Vodafone-owned Safaricom. It is estimated that M-Pesa handles some 2 million transactions per day.

This announcement by the finance ministry will surely have caught the mobile service providers by surprise, coming a day after Airtel Kenya removed transfer costs on its mobile money services to allow subscribers to send money through their phone at no cost, in a bid to cut into M-Pesa’s market share.quotesmarksleft.jpg

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