MOBILE phone maker Nokia is urging Kenya to seal all tax evasion loopholes to level the playing field as new VAT charges take effect.
Speaking after the launch of two new handset models in South Africa on Wednesday, Nokia East Africa general manager Bruce Howe said a fair tax collection policy will reduce the impact of the black market handset trade in Kenya.
"Our call now to the government is that it should make sure that collection (of tax) is a fair process and that anyone that operates outside that process is shut down," Howe said at a media briefing with Kenyan journalists.
Citing the example of South Africa where mobile phone handsets are charged a VAT of 14 per cent, Howe explained that the border points in that country are so tightly controlled that it is not easy for tax evaders or importers of fakes to infiltrate the market.
Late last month, handset manufacturing firms and other IT Industry players had decried the introduction of the 16 per cent tax on handsets arguing that it will give rise to use of fake, dumped or second hand phones in the country which would deal a big blow to their business and mobile and internet penetration levels in the country.
Howe also called on the government agencies to streamline the payment process of this VAT noting that Nokia stocks had been stuck at the airport last week due to confusion among authorities at the point of entry.
"Nobody knows how or who to pay this to and how it will be reconciled and how it will be recognized in the accounts," said Howe.
"The market is frozen at the moment, nobody is bringing in stock and nobody is selling."
Howe called on the government to streamline the collection process faster and to introduce tight checks at the borders.
He warned that failure to do so could result in Kenya going the Tanzania way where he noted that the market was "out of control" and that Nokia had no sustainable market in that country owing to problems associated with counterfeits and grey market.
"In the worst case scenario, our office in Nairobi would be non viable and we would perhaps have to close it down, if these were to happen in Kenya," he added.
Nokia's Nairobi office is the regional headquarters for Eastern Africa operations.