Internet VAT bites consumers

By Gregory Gondwe, Blantyre, Malawi

Malawi’s internet consumers will have to dig deeper into their pockets following the government’s reintroduction of value added tax (VAT) on internet services, which came into effect on July 1, 2013.

During his presentation of the 2013/2014 national budget, the Minister of Finance, Ken Lipenga, announced that government had introduced a standard rate of 16.5 percent VAT on internet services.

“...So as to allow internet service providers to claim input VAT and this will in turn reduce costs associated with the provision of internet services thereby making internet services relatively cheaper and accessible to users,” Lipenga justified the increment.

Most internet service providers have since increased their tariffs upwards.

Most internet cafes who were charging K5 per minute have since adjusted to between K15 and K20.

Mobile phone service providers whose internet is the most accessed have also increased their tariffs with Airtel Malawi raising its tariffs by an average of 16.72 percent.

On the other hand, rival TNM has increased its 3 kilobytes by 25 percent from K0.04 to K0.05 while one gigabyte has been upped by 16.5 percent from K13.65 to K15.90 effective July 15.

Both Airtel Malawi and TNM issued in press statements advising customers that internet rates will be adjusted upwards following the reintroduction of VAT by government.

Several users interviewed have cried foul over the hiking of the internet cost.

“I think this is not fair, the mobile phone companies make a lot of money why can’t they forgo this VAT thing,” wondered a journalist working for one of the commercial radio stations in Blantyre.

A customer for one of the cafes in Limbe also said an increment from K5 to K15 as is the case at his usual cafe is restrictive.  

The International Telecommunications Union statistics for 2009 shows that approximately 4.7 percent of the country’s inhabitants used the internet.

According the African Media Barometer Malawi 2012 but released  in 2013 Most Malawians use their mobile phones, rather than computers, to access the internet while ITU’s 2011 statistics show that 3.9 million Malawians have mobile phones, which is about one quarter of the population.

African Barometer findings says mobile phones are relatively cheap in Malawi, around K4, 000 (US$16) and says through Malawi’s four mobile phone companies in Malawi: Airtel, Telecom Networks Malawi (TNM), Access and MTL. 3.33 percent of the population have access to the internet, but just 0.06 percent of the population have fixed broadband subscriptions according to ITU.

The report also quotes the ITU which described Malawian internet access as one of the most expensive in the world. 

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