Malawi Government levies tax on Internet/SMS

May 27, 2015 • East Africa

Government has announced that it will starting from this year levy 10 percent excise duty on mobile phone text messaging as well as all data transfers including internet and similar services.

This was announced in Parliament on Friday when Finance, Economic Planning and Development Minister Goodall Gondwe presented a national budget for 2015-2016 financial year.

People have expressed fears that this move will make Malawians unable to access internet services and therefore be denied their right to information.

A software developer Kondwani Lokwaila said already this is adding on another decision in 2013 when Government instituted a tax on internet services.

What is disheartening is that these additional costs of services are passed on to consumers and the service providers do not feel anything,” he said.

BBC Online reported in February that Malawians have expensive mobile phone habits.

Taking advantage of these wanton spending on mobile phone service by consumers, Government says they will have to start paying more for it.

“Mr. Speaker, Sir, as Honourable Members are aware, Government removed customs duties on mobile phones in order to improve access to mobile telecommunication to complement this development” started Gondwe before continuing, “Government went further to remove customs duty on solar cellular telephone chargers following the tremendous uptake of the telecommunication services in Malawi, and in order to expand the tax base to generate resources for this budget, 10% excise duty will be levied on text messaging and all data transfers including internet and similar services”

In a bid to bring down the charges in the telecommunications sector, the Malawi Communications Regulatory Authority (Macra) has commissioned an independent survey to analyse market trends:

Part of the recommendations presented by the experts is to increase competition in the sector, currently dominated by two operators.

This is frustrating the efforts by the Malawi Communications Regulatory Authority (Macra) which had been trying to bring down the charges in the telecommunications sector to an extent of commissioning an independent survey to analyse market trends.

Macra’s Director of Finance Ben Chisonga told BBC online that part of the recommendations presented by the experts is to increase competition in the sector, currently dominated by two operators, Airtel Malawi and TNM Limited.

“We are thinking of introducing more data players in the market…[while] for the current players, we are thinking of reducing the interconnection rates, which are about four cents per minute, which we believe, is the highest in the continent,” Chisonga was quoted as saying.

And quoting a report by the International Telecommunications Union (ITU) BBC says on average Malawians use more than $12 (GBP 7.70) a month on mobile phones which is more than half of what an ordinary Malawian earns in a month.

According to 2014 Freedom House report on Freedom on the internet, Malawi’s presence on the internet is one of the lowest in the world, with a penetration rate of just over 4 percent as of the end of 2012 while Mobile phone penetration is also low at 28 percent compared to an average of 76 percent across the continent as of February 2013.

Malawi’s most users log on at internet cafes, as computers are a luxury for ordinary households, and very few households have access to the internet at home.

The report says the recent introduction of affordable 3G and 3.75G mobile broadband services has led to increasing mobile internet access and declining patronage at local internet cafe operations.

Freedom House says service on the GSM network has expanded throughout the country to cover 93 percent of the population.

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