13 March 2013

Kenya: Safaricom Could Lower M-Pesa Fee

THE transaction cost of M-Pesa could be lowered after bankers got a court injunction against the Kenya Revenue Authority over the taxation of money transfer services.

Safaricom has said it is considering the options that could see the transaction costs go down to the previous level.

The the High Court last week stopped KRA from charging excise duty on money transfer products run by banks until the case filed by Kenya Bankers Association is heard on March 18.

"We are of course following this matter very keenly and have sought independent legal and tax advice before taking any action of our own," said Nzioka Waita, Safaricom corporate affairs director.

"The ruling (made last week) does not delve in to the substance of the suit per se, but recognises that there are important legal issues to be addressed at the full hearing," he added.

Finance minister Njeru Githae introduced amendments to the Customs & Excise Duty Act imposing a 10 per cent excise duty tax on transaction fees for all money transfer services provided by cellular phone providers, banks, money transfer agencies and other financial service providers. The government expects to raise up to Sh4.5 billion annually form this.

The amendments were gazetted last month prompting Safaricom to review its M-Pesa tariffs with effect from February 8. Transaction charges for amounts from Sh101 were increased by 10 per cent, while the company absorbed the tax for remittances of lower than Sh100.

"We do however recognise that the new tax imposes a significant burden on the consumer and as we seek clarity on the new law we shall explore all possibilities at our disposal to mitigate this burden," said Waita.

But for now consumers will continue paying the 10 per cent.

Only Safaricom and Essar Telecom have announced an increase in their money transfer tariffs so far.

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