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Tax hike to hit mobile money

The booming mobile money sector is likely to be hit by Kenya’s Treasury move to impose a levy on mobile money transfers.

The levy was announced by Finance Minister Nieru Githae, amid a raft of new tax measures in the finance amendment bill, designed to raise over Sh40 billion needed to meet public sector wage adjustments.

The new 10% excise duty on mobile money transfer services is expected to generate around Sh4.5 billion for the government. Githae says the duty will be paid by service providers, not consumers, but there are concerns that the hike will inevitably be passed on to consumers.

The move is likely to impact on mobile money leader M-Pesa, Orange Money, Airtel and Yu. Airtel followed the announcement with the news that its customers can send money free of charge to any network in Kenya.

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