Nokia lobbies for less VAT

November 24, 2008
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, CAPETOWN, November 24 – Mobile phone manufacturer Nokia is lobbying governments in the Sub-Saharan region to scrap Value Addition Tax (VAT) on cellular phones.

The company insists that this is one sure way to rid countries of counterfeit phones and the negative effects that result from the trade of these gadgets.

Vice President for Sales Sub-Saharan Africa Loren Shuster has said such a move may not necessarily result in a loss in revenue for governments as the same could be recovered from increased usage of air time by subscribers.

“Ghana has done it, and their phone industry is experiencing phenomenal growth as a result of this.  We are actually opening a new office in Accra as a result of this,” Shuster said.

In Kenya currently 16 per cent VAT is imposed on mobile phone sets and an extra three per cent customs and duty charges making it nearly 19 per cent tax on mobile phones.

Mr Shuster noted that if countries made this move a lot could be achieved on the development front. Notwithstanding that a lot of individuals’ first contact with the internet will be through mobile phones.

“At least 40 per cent of mobile users in the sub-Saharan region have had their first access to the internet through the mobile phone,” Mr Shuster revealed.

He said research carried out by Nokia in Kenya and Nigeria revealed that most mobile users access internet for the first time through their phones.

Currently the government has zero rated computer hardware in the country and thus set a precedence on which players in the mobile phone industry are banking on.

However on the other hand mobile operators in the country have also indicated plans to intensively lobby to reduce excise tax on airtime which currently stands at 26 percent.

Two weeks ago, mobile phone operator Safaricom, through its Chief Executive Michael Joseph indicated that it would pursue the initiative to lobby for the reduction of the taxes.

“This association of about 10 operators will try to put together a massive lobbying effort not only with the government because if you just go to the Ministry of Finance whose duty is to look for sources of revenue, we become easy targets unless we give an alternative.  But what we will do now is broaden our initiative by lobbying Members of Parliament and the masses so that we get better results,” he said.

This is not the first time mobile operators in the country have tried to lobby the government before the budget is read to reduce the taxes but they are yet to succeed.

Speaking at the launch of new N-series devices-the Nokia N85 and Nokia N79 in Cape Town, Mr Shuster mentioned that research carried out by Nokia previously indicated that for each 10 per cent increase in mobile usage, there was a resultant 0.5 percent growth in the Gross Domestic Product of a country.

In addition to the new devices, launched, Nokia showcased their online services platform, Ovi, meaning ‘door’ in Finnish and symbolising a door to an online world.

The site functionality also includes personal information management (PIM) sync as well as Nokia Ovi suite for PC and files on Ovi remote access service.

“These different elements of Ovi help you manage your personal information and media in various ways through a simple and unified interface,” Mr Shuster explained.

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