Government introduces new 5% internet tax. ISPs increase internet prices

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Last year in December, Zimbabwe’s Minister of Finance, Patrick Chinamasa proposed a 5% tax on all mobile phone airtime and broadband as part of his budget proposals. The tax, called a Health Levy and themed “Talk, Surf and Save a Life”  is expected to be part of the budget allocation for the Ministry of Health and be used for procuring drugs and equipment with effect from January 2019. 

Government has finally implemented this 5% Health Levy proposition with an amendment to the law (Finance Act (No. 2) 2017, Section 31(49). The government is backdating the application of this tax to January 2017.

Predictably internet providers are passing this cost on to consumers and have already started communicating the tariff change.

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A customer of Liquid Telecom sent Techzim the letter they received from the fibre company. Essentially, they are advising customers that the tariff will now be increased. Here is the letter:

 

RE: 5% SPECIAL EXCISE DUTY ON ALL TELECOMMUNICATION SERVICES

On the 24th of March 2017, the Minister of Finance amended the Finance Act (No. 2) 2017, Section 31(49) to levy an additional 5% (Five percent) special excise duty, which has been designated as a Health Fund Levy on our services. This is to be levied and collected by us from you and credited to the Health Fund Levy established under section 18 of the Public Finance Management Act [Chapter 22:19] (11/2009).

We therefore advise that consistent with this new legislative requirement, we will be applying a 10% excise duty for all our data and airtime services with effect from 1 April 2017; this will reflect on your monthly invoices from 1 April 2017 going forward.

Kindly note that the gazetted effective date of this new requirement has been set to apply retrospectively to 1 January 2017. We have engaged the authorities to request a waiver of the first 3 (three) months and proposed an effective start date of 1 April 2017 in a bid to cushion our clients. We will keep you informed on the development of these engagements.

We thank you for your usual cooperation.

Yours Faithfully,

We expect other telecoms companies will also announce similar changes in the coming weeks. Update: And they have.

Whether it’ll actually be used for that or not is ofcourse another matter altogether. Not to sound too negative on our government, but it likely won’t. Just recently for example, the Minister of ICT proudly disclosed that he had used Universal Services Fund to buy a new company for the government (the company is a competitor of the fund’s contributors).

It’s really just a matter of the government identifying sectors that are profitable and targeting them with new taxes.

Liquid Telecom is one of the fastest growing internet service providers in Zimbabwe in particular and Africa in general. It provides state of the art fibre internet which links Zimbabwe and the Southern African region to the outside world. The company is a subsidiary of Econet Wireless Group and has branches in most parts of Southern and East Africa. Read More

Patrick Anthony Chinamasa is a politician and member of the ruling ZANU-PF party and is currently serving as Minister of Finance in the Zimbabwean government. He served as a cabinet Minister since 2000. Read More

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12 Comments

  1. Wafawanaka says:

    the next thing is we are going to be taxed for going to the toilet with effect form the day you where born

    1. Medhemu Bhosi says:

      True

  2. Langton says:

    Profits for these Telecoms companies are going down and they continue to suffocate them. There is Aids Levy & I wonder where it is going?

  3. bule says:

    these are some of the reason that scare away investors, tax amentment any time any day especially on every lucarative industry sector. I think we now need to propose long term act policy not these short-term.

  4. Senator Tutu says:

    Ma Consumers ndisu tongokwara hayaaa

  5. Simbi says:

    Why do they want to levy 10% when the tax is 5%? Maybe I did not understand this thing properly

  6. Mitch says:

    10% because we are already being charged 5%

    1. Tinashe says:

      So in other words Liquid Telecom interpreted it as “5% tax on evry individual that uses telecommunication services”? I thought it was the ISPs burden, and not openly passing it on to the consumer like that.

  7. TK says:

    Yet 10% tax for farmers is waived, I guess farming is more important than doing business on line

  8. Sagitarr says:

    I thought every business should pay VAT? Why have farmers been excluded? Politically correct? As an individual I pay 25% tax, it pains me that others do not pay a single cent.

  9. NdiniNdadaro says:

    Pamberi neZanu PF. Pasi nevanofunga kuti hurumende irikukanganisa.

    1. Sagitarr says:

      Does Zanu PF pay rent for you? Make a plan, you have less than a year. Bullies don’t scare me a bit. Pasi nevasingafunge.

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