Remove import duty on handsets
Published On September 10, 2015 » 1184 Views» By Davies M.M Chanda » Business, Stories
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THE Government should remove taxes on mobile devices like smartphones and tablets in 2016 to increase the Information and Communication Technology (ICT) penetration rate in the country.
A stakeholder, Mutale Mubanga said there is need to remove import duty and the Value Added Tax (VAT) on smart phones and other ICT devices.
He said this in his submission to the Ministry of Finance towards the 2016 national budget.
“This will provide relief to the consumer and complement the previous measures. The Government will benefit from an increase in VAT collections from increased talk time sales as well as increased corporate tax collections from telecommunications providers,” Mr Mubanga said.
He gave an example of countries like Kenya, which he said removed VAT on mobile handsets in 2009 and saw purchases rise by 200 per cent with a subsequent increase in penetration rate from 50 to 70 per cent.
The contribution of the mobile telephony sector to Gross Domestic Product (GDP) grew by almost 250 per cent which he said the country should emulate.
He said import duty for telecommunication sector equipment should be suspended for three years to complement the efforts of service providers in expanding their network coverage countrywide.
Mr Mubanga said the idea behind the proposals was to get more of the 10.1 mobile subscribers upgrading to affordable smartphones so that they can consume more reasonably priced data.
He said the more people consume such services, the more VAT revenue will be collected by the Government.
Mr Mubanga said communication had started shifting from voice to data but that costs remained high with one gigabyte (GB) of data costing approximately US$18 on average whereas in other countries in the region it ranged from $8 to $15.
He said import duty and VAT on mobile devices were the factors that made access to internet more expensive because they account for a significant portion of the cost.

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