Cost of various digital products and services drops with implementation of new VAT rate

One of the measures instituted by the government of Kenya to mitigate the impact of the COVID-19 pandemic has been the reduction of the Value Added Tax (VAT) from 16% to 14%. 

The change, announced last month, took effect at the start of the new month on April 1st. 

In line with this, various companies that offer various products and services whose pricing is inclusive of VAT, have made the necessary adjustments to implement the tax reduction. 

Safaricom has, effective April 1st, reviewed all its product and service offerings in line with the reduced tax rate. 

As such, buyers of smartphones, tablets and accessories from the company’s retail outlets and online on Masoko, can expect reduced prices that reflect the new tax rate. 

The same is the case for personal postpaid plans. 

Businesses that subscribe to Safaricom’s Fibre to the Business and corporate postpaid products can expect to see the same reduction apply to their billings in the next monthly invoice they receive from the company. 

For prepaid subscribers, the coming into effect of the reduced VAT will be reflected by way of the extra airtime they will be receiving every time they recharge, according to the company. A top-up of Kshs 100 for instance, will result in the subscriber receiving airtime worth Kshs 102. 

Subscribers to Safaricom’s Fibre to the Home product, Safaricom Home Fibre, will have their accounts credited with the additional 2% which they can then use for their next monthly payment. 

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Safaricom’s rival, Airtel Kenya, has also made similar arrangements, at least for airtime purchase, as far as we know. 

“The Government has given us a relief of 2% on VAT and we are passing that back to you, now get 2% more every time you buy airtime…” reads part of a text message the telecommunications company sent to subscribers on April 2nd. 

Pay-TV service DStv has also reduced its prices to conform with the 14% VAT waiver. Subscribers to the service’s Compact package, for instance, will now be expected to pay Kshs 2,455 per month, down from the usual Kshs 2,500 after MultiChoice dropped prices last year. 

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