The Tanzanian government has reduced the tax on mobile money transactions by 43%. The measure was announced last week by Mwigulu Nchemba, Minister of Finance and Planning, during the presentation of the national budget for the financial year 2022-2023.
The tax which fluctuated between 7 and 7,000 Tanzanian shillings ($0.003 to $3) depending on the amount of the transaction will now be between 4 and 4,000 shillings. In addition, the government plans to “extend the base and include all electronic transactions ”.
According to the Global Telephone Operators Association (GSMA), the mobile money transaction tax has impacted Tanzania’s industry and economic and social growth. In its “Tanzania Mobile Money Levy Impact Analysis” report covering the period from July 1 to December 31, 2021, the GSMA said that mobile money revenues fell sharply from 76 billion to 54 billion shillings per month, between June and August, stabilizing at 55 billion shillings in September 2021. Revenues then started to recover and increased to reach 65 billion shillings in December 2021.
According to Mr. Nchemba, the reduction in the tax “aims to reduce the cost of living for Tanzanians, especially during the current period of economic crisis, and to rationalize the levy on transactions”.
However, it will create a significant shortfall for the State, which is counting on the revenue from this tax to support the recovery of the national economy after Covid-19. Tanzania had set itself the objective of collecting $2.1 billion from the tax on mobile money over 5 years.
The total value of global mobile money transactions reached $1.045 billion in 2021, according to the GSMA. Authorities in African countries are introducing taxes to take more advantage of this growing sector.