Firms call for tax breaks on investments

The Kenya Government has a plateful of choices in increasing connectivity in the fast-growing information, communication and technology sector.

The world over, governments are realising that ICT is critical in improving lives and solving pressing social problems. Today, the Internet has become a vital tool for accessing government services, education and research, especially helping the unemployed to find work.

It is such benefits that ICT players, through the Kenya Telecommunication Network Operators (KTNO) and individual lobbying, are banking on to see Finance minister Uhuru Kenyatta make far-reaching recommendations to increase access to technology.

“Excise duty is a tax levied on particular products and services, typically with a suppressing intent. However, the current excise duty on mobile airtime is 10 per cent over and above VAT levied at 16 per cent on the same service,” notes a memorandum that KTNO presented to the Treasury early in the year.

Lower costs

A global industry report notes that a 10 per cent increase in mobile penetration would increase Kenya’s gross domestic product by 1.2 per cent. ICT players also want the capital-intensive industry given tax breaks on their huge investments.

Currently, telecommunications equipment attracts 25 per cent duty. “It is welcome for the Government to waive duty on computer and software (user accessories). However, to lower infrastructure costs, it should also extend this to telecommunications equipment,” said Job Ndege, general manager of Afsat Communications Limited, a satellite operator.

The most far reaching decision ever pronounced by a Finance minister in the previous budgets for the ICT industry was the zero rating of computers and other communication equipment in the 2007/2008 financial year.