More African countries are looking to tax mobile money transactions

Much has been written about the need for African countries to collect more tax revenue from citizens and businesses. The IMF has been imploring sub-Saharan countries, particularly over the last decade, to focus on expanding and diversifying their tax bases.

Some countries have taken heed of the advice. Yet most haven’t moved beyond lip service. When it comes to new taxes, we often see African governments (especially those led by new administrations) setting their sights on commodity players like mining companies and oil multinationals. Now there’s also a growing trend of governments looking to their fastest-growing sector of the past two decades: the mobile phone industry. In most countries, phone companies and mobile operators already pay taxes. The more recent trend is to initiate or raise specific mobile consumer taxes—particularly for devices and transactions. Just over a year ago, Uganda’s regulators introduced a so-called social media tax and a levy on mobile money transactions. Uganda is not alone: Industry research from 2017 shows up to 26% of the taxes paid in the mobile industry in 12 Sub-Saharan countries were industry-specific. Kenya, often highlighted as the leading light of mobile money sector, has also been increasing taxes on transactions and on airtime use, which can result in double taxation—you can’t have a mobile money transaction without already having paid for airtime.


Source: QZ