Kenya’s leading telecoms company Safaricom announced on Friday that it was adjusting its prices for calls, SMS, data, fibre and mobile money services, following a court ruling that allowed the implementation of the Finance Act 2023.
The Act, which includes tax measures affecting various goods and services, had been suspended by a lower court after a petition by Senator Okiyah Omtatah.
However, the Court of Appeal overturned the suspension on Friday, agreeing with the Treasury that it would have irreversible consequences for the budgetary cycle.
The Act increases the excise duty on mobile money transfer services from 12 percent to 15 percent, while reducing the excise duty on telecommunication services from 20 percent to 15 percent.
Safaricom said in a notice to customers that it had reviewed its pricing structure to reflect the new excise duty rates, effective from July 29.
The company said the increase in excise duty on mobile money transfer services would result in adjustments to its M-PESA fees, which are widely used by millions of Kenyans for financial transactions.
On the other hand, the company said the decrease in excise duty on telecommunication services would likely lead to reduced costs for calls, SMS, data and fibre services.
“Following the enactment into law of the Finance Act 2023 and the Court of Appeal ruling on 28th July 2023, effective 29th July 2023, we will be reviewing our Call, SMS, Data, Fibre and M-PESA pricing to reflect the increose in Excise Duty rate on fees charged on mobile money transfer services from 12% to 15% and the decrease in Excise Duty rate on telecommunication services (calls, SMS, data, and fibre) from 20% to 15%,” Safaricom said.
Safaricom urged its customers to familiarize themselves with the updated pricing details, which are available on various platforms, including its official website, app and USSD codes.
The company said it aimed to ensure transparency and clarity regarding the changes to avoid any confusion or inconvenience for its users.
The Court of Appeal’s ruling has given the green light for the government to enforce the Finance Act 2023, which also affects fuel prices.
The three-judge bench justified their decision by highlighting the public interest and the continuity of the tax mechanism. They argued that by allowing the Finance Act to be implemented, citizens who have overpaid taxes can claim rebates during subsequent tax payments.
They also pointed out that the suspension should have been targeted at specific provisions with irreversible effects, rather than applying a blanket suspension across the entire Act.