It seems the taxman aims to make Kenyans sleep less than usual by adding to their tax burden.
In a bid to secure revenue/finances for the government’s key expenditures, the treasury through the Cabinet Secretary H. Rotich announced a tax increase in the budget tabled before parliament for the financial year 2018/2019.
Following the country’s slow economic growth , the inability of KRA to meet its revenue targets given increased expenditure, the government has had to borrow intensively with an aim of fulfilling its responsibilities. Currently, in the hope to fulfil the key “Big Four Agenda” (housing, healthcare, food security, and manufacturing) the government has been forced to look for new ways of creating more revenue. In such a view, the government proposed in the recent finance bill, passed by parliament ,a tax increase for services such as air transport, betting services and banking services-especially the mobile banking services.
Among the proposed affected services, mobile banking or the mobile money transfer, such as Safaricom’s Mpesa, promises to bring forth the biggest revenue. This is because mobile banking has a wide base of users ,since many people especially the poor including those who do not have bank accounts heavily rely on mobile money transfers for their financial transactions.
These amounts to more than 129 million transactions per month reflecting a total of Ksh. 320 billion sent through mobile phones reported in last year’s annual financial review. Furthermore, the review showed that the annual tally of mobile transactions for the year 2017 was more than 606.9 million transactions reflecting a total of about Ksh. 1.8 trillion. As a result, the CS for treasury proposed a 2% increase in exercise duty on all mobile banking services from 10% to 12% accordingly. According to him, the increased tax to be collected by the government will help support social development programs especially the national healthcare.
Safaricom,who enjoys the monopoly in the mobile banking sector in Kenya, made a profit of more than Ksh. 62 billion through Mpesa alone in the last financial year ending March 2018. This was despite losing about 1.3 million subscribers due to political impasse.
Consequently, following the increased taxation on the mobile bank transactions, Safaricom was forced to increase its Mpesa transaction rates and charges with effect as of July 1st, 2018.
The increased Mpesa money agent and ATM rates and tariffs (withdrawal and transfer) have been applied depending on the amounts to be transacted and the charges of sending money to non-registered subscribers. However, the Mpesa registration and Mpesa statement, all deposits and airtime purchase through Mpesa remain free of charge as it was previously. In addition, sending an amount exceeding Ksh. 1 up to Ksh. 100 is still free. An increase of Ksh 1 will be charged for withdrawing amounts exceeding 500 and below Ksh. 10,000. Withdrawing Ksh. 501 – 2,500, using Mpesa money agent now cost Ksh. 28 from 27 bobs.
Similarly, withdrawing Ksh. 2,501 to 3,500 will now cost you Ksh. 50 up from Ksh. 49. A further increase of Ksh. 2 will now be charged on every withdrawal of amounts ranging from Ksh. 5,001 to 10,000 and another increase of Ksh 3 for amounts exceeding 10,000 to amounts below Ksh. 15,000. An increase of Ksh. 4 will apply to every withdrawal exceeding Ksh 15,000 to Ksh 20,000. Withdrawing money from Mpesa through ATM also suffered the same blow. A significant increase has been applied to specific amounts transacted via ATM with amounts from Ksh 200 – 2,500 rising from Ksh 33 to Ksh. 34.
The specific increased withdrawal charges are as shown below.
Charges for transferring money to registered Mpesa users was also increased with almost the same margin.The charges are as shown below;
What You should Note about the updated Mpesa Charges;
- Maximum allowed balance one can have in his/her Mpesa account is Ksh. 100, 000
- One can be allowed a maximum transaction of Ksh 140,000 per day with only a maximum of Ksh 70,000 allowed per transaction.
- No withdrawal of any amount below Ksh 50 can be allowed at an Mpesa agent shop
- To reverse money to your Mpesa account due to wrong transaction send the transaction confirmation code (MIH9PN0…) to 456 or dial *456# then press 1
- No direct deposits to another Mpesa customer account through an Mpesa agent is allowed
- No more than 3 free daily transactions for amounts ranging from Ksh 1 to 100 is allowed. Any further transactions or the fourth transaction will be charged Ksh 1 for (Ksh 1-49) and Ksh 2 for (Ksh 50-100)
- For any transaction done an original ID card must be produced.