Mobile Money Levy in Tanzania: Government Moves to Remove Fees on Transaction by Oct 1st 2022

Mobile Money Levy in Tanzania Government Moves to Remove Fees on Transaction by Oct 1st 2022
  • Tanzania looks at ways to boost the usage of mobile money platforms

Come October 1, 2022, Mobile Money Levy in Tanzania is set to be removed which will touch on fees imposed on mobile money transactions.

The Tanzanian government recently scrapped the levies on electronic transactions following a public outcry from the citizens who described these fees as outrageous.

Before the introduction of this levy, Tanzania’s mobile money industry was flourishing, with a total of 9.5 trillion shillings being transacted electronically.

The number of mobile money accounts in the country was nearly 26 million at the end of 2019, while the market size was valued at US$45.5 billion.

While addressing the parliament, the finance and planning Minister Mwigulu Nchemba revealed that to lighten the burden of transaction fees on the citizens, the government has moved to scrap the levies for transferring money from banks to mobile networks and vice versa and the levies for transferring money within the same bank.

The government is also planning to cancel the fee for transferring money from one bank to another, and the transaction fee on withdrawal of cash through bank agents and ATMs for values not transcending Tsh30,000.

The minister said that the government is looking to encourage the use of cash transactions, simplify tax collection, and prevent double taxation for both the sender and receiver.

He revealed that to cover the revenue it will waive from the scrapped levies, the government is looking to lessen its expenditure by halting spending on things such as conferences, training, refreshments, and trips.

He mentioned that although in the financial year 2021/2022, the deduction of these fees had aided the government in providing basic services for its citizens, its negative effect on the lives of its citizens has pushed them to scrap it.

Mobile Money Levy in Tanzania: Going Down Memory Lane

In July 2021, Tanzania introduced a levy on mobile money transfer and withdrawal transactions, excluding merchant, business, and government payment transactions, a levy that was imposed in addition to VAT (18%) and excise duty on mobile money transfers and withdrawal fees (10%). After a lot of complaints from Tanzanians, the fee was reduced by 30% in September 2021.

Due to the introduction of the mobile money levy, the number of P2P transfers and cash-out transactions dropped heavily in July and August 2021 to only barely stabilize in September 2021.

There was also a huge fall in the use of mobile money, as users withdrew their assets from their mobile money accounts to use them through other payment methods such as cash.

Telecom companies in Tanzania revealed that their revenue dropped drastically following the introduction of the levy because consumers were no longer using the service.

Online businesses also experienced this due to the increase in cost for customers.

At the end of it all, choosing to scrap this levy imposed on electronic transactions is a great idea as it will lessen the financial burden on Tanzanians.

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