Taxation and government regulations could stifle mobile growth

Taxation and regulations in Sub-Saharan Africa could kill the growth of the mobile phenomenal in the region, according to a GSMA report.

The report titled Sub-Saharan Africa Mobile Observatory 2012 notes Africa has the highest taxation numbers globally, with taxes on mobile handsets seemingly higher than any other region.

These typically include custom excises and luxury taxes imposed on imported handsets, as well as a host of mobile-specific taxes ranging from airtime excises applied to mobile telephony usage to fixed contributions on connections, the report stated.

This comes weeks after the Kenyan government announced it will begin to tax the mobile money transfer service in a bid to cover some of its expenses. This, according to the GSMA report, will stifle growth in that sector.

Gabon has the highest rate of taxation in the mobile industry sector with a 37.2 percent rate, which includes 18 percent Value Added Tax (VAT) charge, 30 percent duty on imported handset with an additional US$5 on every handset and 18 percent excise duty on airtime.

It is also noted countries that have less tax imposition, have a bigger growth in terms of mobile phone penetration. Kenya has a custom duty on imported handsets at two percent and Nigeria at 10 percent.

Tom Phillips, Chief Government and Regulatory Affairs Officer at GSMA, said: “Tackling stifling regulation, addressing high taxation and implementing a harmonised approach to future spectrum allocation will further boost the success story of mobile across the continent.

“There is not only the potential to lift millions out of poverty, but also the opportunity to ensure that Africa benefits from global economies of scale in terms of both network technology and mobile devices.”

Posted in: Mobile

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