Safaricom Announces Planned Tariff Increase Following Court’s Decision on Finance Act 2023

Safaricom, a leading telecommunications company in Kenya, intends to raise prices for its M-Pesa mobile money tariffs, phone call rates, fibre, and SMS charges. This move comes as a response to the new provisions introduced in the Finance Act 2023. The announcement was made just one day after the Court of Appeal lifted an order on July 28^th 2023, issued in June 2023, that had suspended the implementation of the controversial act.

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The suspension, which had been in effect since 30^th June 2023, was lifted by a three-judge bench pending the determination of an appeal filed by Treasury Cabinet Secretary Prof. Njuguna Ndung’u. During the appeal, Ndung’u informed the Court that the State was incurring losses of Kshs 500.0 million per day due to the halt in the act’s implementation.

As a result of the new excise duty rates, Safaricom plans to review the pricing of its major services. Specifically, the company will adjust call, SMS, data, fibre, and M-Pesa pricing to accommodate the increase in excise duty rates on fees charged for mobile money transfer services from 12.0 per cent to 15.0 per cent.

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Additionally, Safaricom intends to consider the decrease in the excise duty rate on telecommunication services from 20.0 per cent to 15.0 per cent. The company has informed its customers that detailed pricing information for all its products can be accessed through its website, USSD codes, and M-Pesa agents.

The Finance Act 2023 encompasses several tax hikes, such as an increase in Value Added Tax (VAT) from 8.0 per cent to 16.0 per cent on fuel and a new housing levy at 1.5% of every formal employee’s gross monthly income in the public and private sectors with same amount submitted by respective employers. The two tax changes have sparked widespread public discontent and led to anti-government protests spearheaded by the opposition coalition Azimio.

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