Tanzanians will from July 1st, pay more to access telecommunication services following the Government’s decision to impose 14.5 percent excise duty on these services.

 “A 14.5 percent tax increase on this service will not address the low Internet penetration level or give customers who currently do not use the internet a reason to do so. It is our belief that any tax increase on this service will create an even bigger gap with other countries on the continent as well as deter non users from trying the service,” says Mobile Operators Association of Tanzania (MOAT). 

As per the Finance Bill 2013, telecommunication services are defined as a service of any description provided by a telecommunication company by means of any transmission, emission or reception of signs, signals, writing, images and sounds or intelligence or information of any nature by wire, optical, visual or other electromagnetic means or systems.

With regards to the imposition of 14.5 percent excise duty on internet services, MOAT says this would work against all the other ongoing initiatives that are aimed at converting Tanzania into a knowledge based society.

According to MOAT, Tanzania has one of the lowest Internet penetration rates in Africa at only 10 percent as compared to neighbouring Kenya which has an Internet penetration of over 40 percent.

“Excise duty was previously only applied to voice calls at 12.5 percent. This year the Government of Tanzania has increased the rate to 14.5 percent whereas neighbouring Kenya and Uganda have maintained their excise rates at 10 percent and 12.5 percent respectively,” MOAT said.

MOAT further states that, “mobile communication is not a luxury but a necessary infrastructure in Tanzania today, how then can we penalize the very same people who rely on this service to better their lives through repeated tax increases?” Read part of MOAT’s statement.

MOAT goes on to say that at 35 percent, the sector was already heavily taxed and could not absorb any further increases. “Rural expansion is the entire sector’s priority. We believe this is where growth in the telecommunications industry will come from in the next decade and therefore, need to be incentivized beyond the Universal Communication Services Access Fund (USCAF.)  Any tax increases will heavily impede on our ability to roll out our networks in rural areas,” says MOAT.

“While we do understand the Government’s need to access funding for critical areas of the society, it is unfortunate that the mobile communication services sector continues to bear the brunt of these increases and will be forced to pass on any increases to the customer,” says MOAT.