Tanzanians forced to pay more for telecom services

20 Jun 2013

From 1 July 2013, Tanzanians will have to pay more to access telecommunication services following the government’s decision to impose a 14.5% excise duty on such services. Under the Finance Bill 2013, telecommunication services are defined as ‘a service of any description provided by a telecommunication company by means of any transmission, emission or reception of signs, signals, writing, images and sounds or intelligence or information of any nature by wire, optical, visual or other electromagnetic means or systems.’

Critics argue though, that the imposition of the excise duty is contrary to the state’s publicly-stated policy to convert Tanzania into a knowledge based society. Tanzania has one of the lowest internet penetration rates in Africa (circa 10%), which compared unfavourably to neighbouring Kenya which has an internet penetration of over 40%. According to lobby group the Mobile Operators Association of Tanzania (MOAT): ‘a 14.5% tax increase on this service will not address the low internet penetration level or give customers who currently do not use the internet a reason to do so. It is our belief that any tax increase on this service will create an even bigger gap with other countries on the continent as well as deter non users form trying the service.’ The association goes on to say that ‘at 35% the sector was already heavily taxed and could not absorb any further increases. Rural expansion is the entire sector’s priority. We believe this is where growth in the telecommunications industry will come from in the next decade and therefore, need[s] to be incentivized beyond the Universal Communication Services Access Fund (USCAF.) Any tax increases will heavily impede on our ability to roll out our networks in rural areas.’