Adil El Youssefi, CEO of Liquid Intelligent Technologies for the rest of Africa, emphasized that while the government aims to increase revenue, it’s crucial to assess these measures with a long-term perspective.
Youssefi stated that discussions are underway among industry participants to find a balance between the state’s immediate revenue needs and the long-term investment required in the sector. “We believe certain taxes should be evaluated with a long-term view. Implementing excise duties on internet services or taxing wayleaves for internet infrastructure may generate short-term revenue but could hinder growth in the long run,” he stated.
Starting July 1, 2024, Kenyans will face higher costs for phone calls and internet access due to a proposed increase in excise duty from 15% to 20%. This tax hike could lead telecommunication companies to pass on additional costs to consumers.
“Our focus should be on prioritizing long-term investment to ensure comprehensive fiber connectivity across Kenya,” Youssefi added.
Despite being the most taxed country for internet access in East Africa, Kenya continues to lead in internet usage, as noted by Statista. This growth is driven by the rapid expansion of e-commerce and social media, outpacing neighboring countries like Uganda and Tanzania.
Additionally, despite pressure from the Organisation for Economic Co-operation and Development (OECD) regarding a global minimum tax, Kenya will maintain its 1.5% Digital Service Tax on major tech companies such as Amazon and Google. Fortunately, the OECD has exempted Kenya from signing the contentious global minimum tax agreement.
Liquid Intelligent Technologies also highlighted the successful operationalization of its Kenya-Ethiopia terrestrial route, which is essential for enhancing the resilience of the East African network. “This route is live and actively handling traffic. Historically, Ethiopia has relied on internet services from Djibouti and Somalia. Currently, our fiber business contributes approximately 10% to the group’s overall revenues,” Youssefi noted.
Stakeholders in Kenya’s technology sector are convening to evaluate the long-term effects of proposed taxes on internet services in the country
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