The treasury will increase excise duty on telephone and internet data services up from 15% to 20% in addition to the prevailing value-added tax applicable to mobile services at the rate of 16%.
The new 5% tax revision was not included in the Finance Bill 2021 and is a proposed amendment that is supposed to take effect from 1st July.
Considering that government services such as drivers’ licenses, land transfers, parking, and license fees must be done online, this will affect data costs which will, in turn, affect internet access and penetration levels, innovation, and employment – especially for the self-employed youths who rely on the internet for their income.
With the new tax hike, airtime purchase is also expected to go up. Previously, excise duty on telephone services has been going up from 10% back in 2017 to 15% in 2018.
Experts have warned that this new review will put the sector under significant strain especially during the Covid-19 Pandemic which has taken a toll on the economy.