Safaricom has voiced concerns over the government’s plan to use mobile money paybills and till numbers as a tool for tax collection, warning that it could disrupt the progress made in digitising payments.
The telco fears that this move could hinder the use of M-Pesa, a platform that has become central to Kenya’s mobile payments ecosystem.
“We are the largest taxpayer, so we are quite conscious about the need to pay taxes but also for our customer base, we are also conscious that this country has made significant progress on digitisation and therefore we need to make sure even as authorities try to expand the tax base, we do not roll back some of the benefits we have seen on digitisation,” said Safaricom CEO Peter Ndegwa.
The government’s proposal is to treat mobile money transactions as virtual electronic tax receipts, similar to eTims (electronic Tax Invoice Management System) receipts, to help track and compute tax for businesses.
This shift comes as the Kenya Revenue Authority (KRA) aims to integrate its systems with mobile operators to catch businesses evading taxes.
Currently, about 200,000 businesses use physical Electronic Tax Registers (ETRs), while over two million use paybills for digital payments. The government aims to focus on businesses generating over Sh5 million annually, mostly targeting informal traders.
“Safaricom continues to engage the right authorities and regulators to make sure they incorporate all the needs of our customers, especially the small businesses,” Mr Ndegwa added.
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The telco is concerned that these reforms could reverse the advances Kenya has made in digital payments.
Meanwhile, M-Pesa transactions have seen significant growth, with total transaction value rising 10.7% to Sh20.9 trillion in the first half of the year. Transaction volumes increased by 30.6%, and sign-ups to Safaricom’s Pochi la Biashara service more than doubled.
Safaricom also generated Sh77.2 billion from M-Pesa, up from Sh66.2 billion, mainly driven by a rise in chargeable transactions.
The government’s move to integrate M-Pesa tills with KRA’s tax systems aims to improve VAT compliance and address the low uptake of physical ETRs.
The link between tills and KRA systems is part of a broader push to tap technology for better tax compliance, including the registration of IMEI numbers for new mobile phones to ensure customs and excise duties are paid.
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