Rene Mezza: Increased telecoms sector taxation will negatively impact technology adoption


Tanzania Revenue Authority (TRA) which ordered service providers to collect the SIM Card tax.
Tanzania Revenue Authority (TRA) which ordered service providers to collect the SIM Card tax.

Vodacom Tanzania MD Rene Meza has warned that the increased tax burden on the country’s telecommunications sector will negatively impact the adoption of technology because it will make mobile communication services, which have over the years become increasingly affordable for all, expensive.

“The increased cost of communication does not encourage the uptake of technology.  It will be difficult for us to rollout our network in more rural areas if there is no market for our services and people cannot afford them,” said Meza.

He made the comments while announcing that Vodacom Tanzania paid Tshs 29.2 billion (US $ 18.1 million) in corporate tax in the first half of its 2013 financial year which runs from April 1 to September 30.

This is an increase of 86 per cent in comparison to the amount of corporate tax that the firm paid during the first half of 2012. In the same period last year, the company paid Tshs 15.7 billion (US $ 9.7million).

On the impact of the Tshs 1,000/- monthly SIM Card tax, Meza says the new tax will affect many other initiatives in the sector, including rural expansion, and it will deny many Tanzanians access to basic and affordable telecommunications services.

Already, telecoms industry analysts have said that the disconnection of customers who will not be able to pay the Tshs 1,000 (US $ 0.62) SIM card tax will lead to a reduction in government revenue because these customers do pay 14.5 % excise duty and 18 % VAT on their current lower usage.