Mobile phone firms go to court over Sim duty

Major mobile phone companies have sought injunctions from the Tax Appeals Tribunal, barring the Tanzania Revenue Authority (TRA) from collecting a Sh1,000 tax on each Sim card from July 1, this year.

Vodacom Tanzania Public Relations Officer Obed Mutua, said that five companies had separately filed application to restrain TRA from collecting the tax.

The other firms are Tigo, Airtel, Zantel and TTCL. They are all members of the Mobile Operators Association of Tanzania (Moat).

“It should be noted that penalizing the companies means penalizing the customers. Failure to pay the tax is a criminal offence. Companies will also not be able to rollout network services since our target customers will be disconnected,” Mr Mutua said.

Moat recently said that at least eight million Tanzanians will not be able to access mobile phone services because of the tax.

The Sh1,000 excise tax, legalised by the 2013/14 Finance Act, came into effect on July 1, 2013.

Should the companies agree to pay the tax, each mobile phone subscriber will be charged Sh3,000 for the three months that have lapsed so far.

Tanzania has a mobile penetration of about 48 per cent, translating into approximately 22 million users, according to Moat statistics.

Forty to 45 per cent of mobile phone users in Tanzania will be cut off, meaning that about eight million subscribers will be affected.

Moat further says that the tax will hamper the progress made in the mobile communication sector where services were becoming increasingly affordable for all.

“The Sh1,000 charge per month will also hamper the progress made in the mobile communication sector to date, which has seen services becoming increasingly affordable for all,” the association says.

President Jakaya Kikwete has appointed a committee to look into the issue.

The committee, which included officials from the ministry of Finance, TRA and telecoms companies, came up with recommendations that were submitted to Finance deputy minister Janet Mbene.

It is also claimed that the Sim card tax proposal was not presented at the first reading of the Budget, and was sneaked in by the Budget Committee.

The taxman on September 12 gave mobile phone firms a 14-day ultimatum to remit the tax, which was due on July 1, or face penalties.

On Friday, mobile phone users under the Consumers Consultative Council of the Tanzania Communications Regulatory Authority (TCRA), filed a petition at the High Court against the enforcement of the tax.

The petition was brought before a three-judge bench comprising Mr Justice Lawrence Kaduri, Mr Justice Aloysius Mujuluzi and Mr Justice Salvatory Bongole. The matter was adjourned to Thursday.

Apart from the Sim card tax, mobile phone users have also to pay higher charges for money transfer services. Inter-bank transfers also draw higher charges.

TRA said in a statement that banks and telecommunications companies are supposed to remit taxes from July 1.

“If a bank, financial institution or a telecommunication company for one reason or another fails to comply with the law, then according to section 56 of the Act such duty shall be payable to the bank, financial institution or the telecommunication company and may, without prejudice to any other means of recovery, be recovered by legal proceedings,” says the TRA statement.
Source: The Citizen, reported by Ludger Kasumuni from Dar es Salaam, Tanzania
Share on Google Plus

About Abduel Elinaza

This is a short description in the author block about the author. You edit it by entering text in the "Biographical Info" field in the user admin panel.